It is part of the transaction falling within the framework agreement with the Indian group, Tata Sons, which aims to carry out the merger between Air India and the other domestic company, Vistara. Singapore Airlines intends to finance this investment entirely from its internal cash resources, which total approximately $17.5 billion.
SIA and Tata also agreed to take part in additional cash injections, if needed, to fund the growth and operations of enlarged Air India in the 2022-23 fiscal year. The injection of additional capital could amount to 650 million dollars.
With this agreement, SIA will merge its presence in India, strengthening its multi-hub strategy and also actively taking part in the rapidly growing Indian domestic market.
Currently, Air India (including Air India Express and AirAsia India) and Vistara have 218 widebody and narrow-body aircraft, serving 38 international and 52 domestic destinations. With the integration, Air India will be the sole Indian airline to operate both scheduled and low-cost airlines.
With this partnership, the aim is to optimize the route network and the use of resources with greater flexibility, also favoring the interception of other market segments thanks to the expansion of the frequent flyer program.
Goh Choon Phong, Chief Executive Officer of Singapore Airlines, said: “Tata Sons is one of the most established and respected names in India.
“Our partnership started with Vistara in 2013 has resulted in a market leading full service carrier, which has also won many accolades.
“With this merger, we have the opportunity to consolidate our relationship with Tata and directly participate in an exciting new phase of growth in the Indian aviation market.”
“We will work together to support Air India’s transformation agenda, unlocking significant potential, and restoring Air India to its position as a leading global airline.”
Natarajan Chandrasekaran, President of Tata Sons, commented: “The merger of Vistara and Air India is an important milestone in our journey to make Air India a truly world-class airline.
“We want to transform Air India, with the aim of providing high-profile air services that ensure a flight experience for the customer that lives up to expectations. We are already working to improve the standards of safety, punctuality, and reliability of all the carrier’s air services, and with the entry of SIA we are certain we will achieve our objectives.”
The operation set up by Singapore Airlines and Tata Sons is of international importance considering that India constitutes the third largest aviation market in the world and that the Indian economy is one of those with the fastest growth expected from here to 2030. It is no coincidence that the demand for air travel is constantly increasing and passenger traffic from India to 2035, according to air transport analysts, will double.
