Tata Sons to bring airline business under single entity post-Air India bid

If Tata Sons bid for Air India succeeds, the group will bring the low-fare airline AirAsia India under the former’s umbrella, according to The Economic Times report. It also added that the full service carrier Vistara is likely to be a part of a combined entity if Singapore Airlines (SIA) which has 49% share, comes on board. According to the report, in order to ensure synergies and eliminate duplication, the Tata group has also reached out to SIA, about its eventual plan to bring a single airline entity and group their joint venture Vistara under the same.

By March 2022, Malaysia’s AirAsia Bhd, which owns 16% of AirAsia India will exit, selling its remaining stake for $18 million, the report added. Financial bids for Air India were submitted on September 15 by Tata and SpiceJet promoter Ajay Singh.

Once AirAsia exits, the brand will cease to be a part of the venture. AirAsia India, at present has two planes leased from AirAsia Bhd’s erstwhile plane leasing unit. It is said that the lease tenure will end soon.

Tata has appointed Bain Capital and Seabury group to conduct all the due diligences before it invests in AirIndia, if the bid succeeds.

The group, through a new subsidiary called Talace Ltd has bid for the national carrier. However, its not clear whether Talace will be the single holding entity of the group’s airline businesses.

Group may hire Integration Specialists

Owing to the complications involved in clubbing multiple organisation structures to create a solo airline entity, Tata group is exploring plans to hire integration specialists.

According to the latest data from the Directorate General of Civil Aviation, Air India, AirAsia India, and Vistara have a combined market share of 26% in domestic air passenger market at present, with market leader Indigo having a 57% share.

Tata Sons owns almost 84% of AirAsia India. Late last year, it bought an additional 32.67% in the budget carrier, from 51%.