Air India CEO Meets India Antitrust Chief: What’s Brewing with the Pending Vistara Merger?

In a bid to address the concerns raised by India’s antitrust watchdog, the Competition Commission of India (CCI), Air India CEO Chief Executive Campbell Wilson recently held talks with the antitrust head regarding the pending merger with sister airline Vistara. Tata Group, which acquired Air India last year, is closely scrutinizing the planned merger with Vistara, a joint venture between Tata and Singapore Airlines, as the Competition Commission of India (CCI) keeps a close watch on the process. This merger aims to create a strong competitor to challenge the local market leader, IndiGo.

CCI’s Concerns about Market Power

According to sources familiar with the matter, the CCI’s confidential notice to the airlines expressed worries about the potential market power of the merged entity in both international and domestic routes. Furthermore, the CCI’s initial review indicated that the Tata Group’s market share could exceed 50% in at least seven domestic markets, raising competition concerns.

Meeting with the Antitrust Chief

In response to the CCI’s concerns, Air India’s CEO Campbell Wilson and the General Counsel of Tata Group, Sidharth Sharma, recently met with India’s antitrust chief, Ravneet Kaur, to discuss the ongoing merger process. The meeting aimed to address the concerns and find a way forward to resolve potential competition issues. However, the details of the meeting were not disclosed due to their confidential nature.

Seeking Regulatory Approvals

The CCI, Tata Group, Air India, and Vistara have not yet provided official comments on the matter. Earlier reports suggested that the Competition Commission of India (CCI) expressed concern about potential monopolies in certain routes and categories resulting from the merger of Air India and Vistara, particularly in the business class travel segment.

Industry Concerns about a Duopoly

The CCI’s scrutiny comes at a time when the industry is expressing growing concerns about a possible duopoly, with a merged Air India-Vistara and IndiGo controlling over 75% of the domestic market. Smaller rivals like SpiceJet and Go First are finding it challenging to compete with the two dominant players.

Market Share Figures

As of the first half of 2023, IndiGo held a market share of 58%, while the Tata Group airlines, including AirAsia India, accounted for 25%. The potential merger could significantly strengthen the Tata Group’s position in the market, leading to the CCI’s concerns about market concentration.

Next Steps

Air India is yet to respond to the CCI’s concerns. Once they submit their response, the antitrust watchdog will review their submissions and decide whether to approve the merger or initiate a broader review if it finds the responses unsatisfactory. Vistara CEO Vinod Kannan had previously mentioned that the Air India-Vistara merger was expected to receive all regulatory approvals by April 2024.

As the merger between Air India and Vistara remains under scrutiny, the aviation industry eagerly awaits the final decision from the Competition Commission of India. The potential creation of a strong competitor to IndiGo could reshape the market dynamics, but it is crucial for the CCI to address concerns about market power and competition to ensure a fair and competitive landscape for the benefit of consumers and the industry as a whole.

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