Two individuals with direct information said India’s antitrust regulator is reviewing Air India’s planned merger with Vistara and has asked the business why it should not be scrutinized further over competition concerns, potentially delaying the process.
Last year, Tata Group bought Air India from the government. The Indian airline wants to upgrade its fleet, operations, and revenue management.
In November, Tata announced it was merging Air India and Vistara to form a larger airline to compete with IndiGo (INGL.NS) and Middle Eastern carriers that dominate outbound travel from India.
One of the two individuals, who declined to be named due to confidentiality, claimed the Competition Commission of India (CCI) has warned that the merged corporation may have a monopoly on specific routes and categories, such as business class travel.
According to two sources, Air India has 30 days to respond to the CCI’s “show cause” notice.
CCI, Air India, and Vistara did not immediately respond to demands for comment.
Vistara is a Tata-Singapore Airlines (SIAL.SI) joint venture.
The second source said Air India might give up routes or reduce the frequency to accommodate the CCI’s concerns. Air India maintains hopeful the situation can be handled by recommending specific changes.
Vaibhav Choukse, head of competition law at India’s J. Sagar Associates, said that if the CCI isn’t happy with Air India’s response or concessions, it could request a three-month “Phase II” assessment.
Choices said “a detailed investigation where the CCI seeks comments and objections from stakeholders,” including the public, might affect the merger. Choices are uninvolved.
The CCI note comes amid industry fears over a duopoly, with a merged Air India-Vistara and IndiGo dominating more than 80% of the domestic market as SpiceJet (SPJT.NS) and Go First struggle.
Big airlines’ global markets scrutinize mergers. Tata and Singapore Airlines predicted a March 2024 merger in November.
The first source stated Vistara and Air India, which travel to London and Dubai, need antitrust clearances in other countries.
The source said Air India expects similar queries from foreign governments once it asks for permission elsewhere but is waiting for the India process to conclude first.
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