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Singapore Airlines and The Tata Group Mull bid for Air India

There’s a huge possibility that Air India may be heading back to its origins. The Tata-Singapore Airlines group owns and operates Vistara and is considering to purchase Air India under the government’s recent terms of sale. If it wins, we can now foresee a new landscape develop in the Indian market.

It’s no longer surprising that Singapore Airlines has been consistently rated as one of the best airline companies in the world. It has been in operation for over five decades now. It offers various low-cost and full-service subsidiaries namely Scoot and SilkAir. On the other hand, the Tata Group has been in the industry since the 1930s as they founded India’s first-ever airline company and named it Tata Airlines. It was nationalized in 1953 by the government. For the past decades, it has been behind two domestic carriers, having majority positions in AirAsia India and Vistara.

To give you an idea, this is not the first time Air India has been up for sale. Tracing back in 2018, the government did offer to sell around 76% of the carrier. Unfortunately, this bid failed to attract investors due to its huge debt that almost reaches $5.1bn and the possible interference by the government with its 24% stake.

In the latter part of 2019, the government released its new plan. This denotes that 100% of Air India is for sale together with the 100% of Air India Express plus the 50% of Air India SATS. These modifications created massive interest in the part of the asset-heavy carrier. In the case of its debt, the government was also able to lessen it to $3.3bn. That’s indeed a more realistic number if you were to consider Air India’s largest fleet.

The most valuable asset of Air India in the eyes of Vistara is its landing slots at various international airports. It has a slot at New York, London Heathrow, Amsterdam, Tokyo, Shanghai, and Chicago. Those are part of its over 45 international destinations. If Vistara will acquire Air India, it will then give access to all of its slots allowing them to fly there much sooner than being planned. Besides, Air India also has several large fleets of the A320 family and 737-800 aircraft from Air India Express. These fleets can be reconfigured and could allow Vistara to commence a rapid international and even domestic market expansion.