The airline announced their plans to work with Tata Sons to merge Vistara into Air India, creating a larger airline while strengthening the luxury carrier’s share into India.
Singapore Airlines Buys 25.1% Stake of Air India for $250 Million
Under the deal with Tata, the jointly-owned regional carrier Vistara will become part of the main Air India network. In turn, Singapore Airlines will spend $250 million USD to purchase a 25.1% stake in Air India, fully funded by the carrier’s cash resources.
The deal gives Singapore Airlines a major interest in a carrier “that is four to five times larger in scale compared to Vistara.” The deal will give the city-state’s flag carrier bigger reach into the rapidly growing Indian marketplace, embracing their multi-hub strategy into a center growing in demand.
“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,” Goh Choon Phong, chief executive of Singapore Airlines, said in a press release. “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.”
If necessary, Singapore Airlines said they are willing to inject more capital into Air India into the future. Once the merge is complete, the carrier notes they could add an additional $615 million investment to “fund the growth and operations of the enlarged Air India” through 2024.
Investment Opportunity Could Stabilize Turbulent Air India
The new partnership and investment from Singapore Airlines could not only benefit Air India’s operations in what is projected to become the third largest aviation market by 2027, but also provide much needed stability for the airline. Prior to the pandemic, the airline was refused refueling rights at six Indian airports due to over $550 million in unpaid bills.
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Source: frugal travel guy