In a significant development for the aviation industry, Singapore's competition watchdog has given its approval for the merger between Air India and Vistara, a joint venture between Tata Group and Singapore Airlines. The move aims to create a powerful full-service airline that can dominate both domestic and international markets.

The plan to merge Air India with Vistara was announced by Singapore's flagship carrier in November 2022. While the merger had already received approval from India's antitrust body, the Competition and Consumer Commission of Singapore (CCCS) had raised concerns regarding competition.

One of the major concerns highlighted by the watchdog was the significant market share held by the two airlines on four key routes—Singapore to New Delhi, Mumbai, Chennai, and Tiruchirappalli. To address these concerns, the parties involved have proposed a series of measures.

Firstly, they plan to maintain capacity on these routes at the levels observed before the COVID-19 pandemic. This commitment aims to ensure fair competition and prevent any anti-competitive practices. Additionally, independent auditors will be appointed to monitor compliance with these capacity commitments. The parties will also submit annual and interim reports to ensure transparency and accountability.

The CCCS has expressed satisfaction with these proposed commitments, deeming them sufficient to address the competition concerns arising from the merger. However, the completion of the merger is still subject to other regulatory approvals and foreign direct investments.

Singapore Airlines, collaborating closely with partner Tata Sons, is actively working towards securing the remaining necessary approvals. The spokesperson for Singapore Airlines expressed optimism about completing the merger once the relevant authorities grant the final clearances.

As of now, Air India has not provided an official comment in response to a request by Reuters for their input on this development.

According to the agreed terms of the merger, Tata, a conglomerate with interests in various industries including autos and steel, will hold a majority stake of 74.9% in the combined entity. Singapore Airlines, on the other hand, will retain a 25.1% ownership stake.

The approval from Singapore's competition watchdog marks a significant step towards the realization of a powerful new player in the aviation industry. The merger has the potential to reshape the market dynamics and provide enhanced services to customers in both domestic and international travel.

With continued efforts and collaboration between the involved parties, the merger of Air India and Vistara aims to create a strong and competitive airline that can provide exceptional experiences for passengers and contribute to the growth and development of the aviation sector.