The CCI’s scrutiny will not have any material business impact, although it could have an effect on the timeline, they said.
The regulator is reviewing the merger of Air India and Vistara as the Tata Group puts its airline consolidation plan into effect. It has not given expedited permission to the process and has asked the two airlines why an investigation of the impact of the merger should not be conducted. The process has moved to phase 2, which will entail more discussions between the parties and the CCI. Air India didn’t respond to queries.
“Anti-trust regulators around the world examine the impact on competition through an origin and destination (O&D) approach to identify relevant market,” said a person involved in the process.
No difference in business costs
“In this, every O&D that the entity operates is considered a separate market and if we take a look at most busy markets, the combined entity of Air India, Air India Express and Vistara will have enough competition to restrain market power.”The Tata Group is merging Vistara into Air India to create a single full-service airline, with Singapore Airlines holding a 25.1% share in the new entity. AirAsia India is already in the process of merging with Air India Express to create a single low-cost subsidiary of Air India.According to data analytics firm Cirium, the entity will have 49% of the total flights on the Delhi-Mumbai route. IndiGo also has a strong presence on the route with 31% of total flights. Similarly, on Delhi-Bengaluru, the second busiest, the combined Air India group will have 52% share of total flights. IndiGo has a 35% share.
On the international sector, the Air India group will enjoy a significant advantage on Delhi-Dubai with 23% of total flights. Emirates, IndiGo and SpiceJet also have a strong presence on the route.
The Air India group has told the commission that there is no business cost difference between a full-service and low-cost airline in India as they operate from common airports and bear the same costs such as fuel, landing and parking charges. After the merger, Air India will be the only full-service airline operating out of India.
The person cited above said that it is positive that the CCI is scrutinising the case as any merger of such scale will invite eyeballs.
“The fact that the CCI is doing a thorough check will ensure that the process will not face any question after completion,” he said.
