The Tata Group has announced the consolidation of its airlines, Vistara and Air India creating an aviation behemoth in the region.

Air India, an airline fully owned by Tata Sons, has been the flag carrier of India. Tata Sons, via its fully owned subsidiary, Talace Private Limited acquired a 100% stake in Air India on January 27, 2022.

Meanwhile, Vistara is a 51:49 joint venture between Tata Sons and Singapore Airlines (SIA) established in 2013.

"With this consolidation, Air India shall be India's leading domestic and international carrier with a combined fleet of 218 aircraft, making it India's largest international carrier and second largest domestic carrier," Tata Group said in its announcement.

It noted that Vistara shall be merged with Air India post receipt of requisite approvals.

Singapore Airlines to own 25.1% of combined entity

As part of the merger transaction, SIA shall also invest Rs 20.59 billion ( US$250 million) in Air India, allowing it to hold 25.1% of the combined airline entity post-consolidation.

The transaction is estimated to be completed by March 2024.

"The merger of Vistara and Air India is an important milestone in our journey to make Air India a truly world-class airline ... We are excited with the opportunity of creating a strong Air India which would offer both full-service and low-cost service across domestic and international routes," said N Chandrasekaran, chairman, Tata Sons, as he thanked Singapore Airlines for their "continued partnership."

"As part of the transformation, Air India is focusing on growing both its network and fleet, revamping its customer proposition, and enhancing safety, reliability, and on-time performance," N Chandrasekaran added.

Goh Choon Phong, chief executive officer, of Singapore Airlines, said: "Tata Sons is one of the most established and respected names in India. Our collaboration to set up Vistara in 2013 resulted in a market-leading full-service carrier, which has won many global accolades in a short time."

"With this merger, we have an opportunity to deepen our relationship with Tata and participate directly in an exciting new growth phase in India's aviation market. We will work together to support Air India's transformation program, unlock its significant potential, and restore it to its position as a leading airline on the global stage," Goh Choon Phong added.