The anti-trust regulator of Singapore has raised concerns over Tata group’s acquisition of Air India as it could limit competition on the India-Singapore air routes.
The regulator has sought certain commitments from the Tata group to address the competition concerns and has decided to further review the transaction, it said in an announcement on Friday.
The Tatas completed the acquisition of Air India on January 27. It owns a majority stake in Vistara – its joint venture with Singapore Airlines. Both airlines operate between Mumbai-Singapore and Delhi-Singapore routes and also carry cargo between the two countries. Singapore Airlines is a significant competitor to both Air India and Vistara on these routes.
The regulator said it received an application from Tata group for a decision on whether the acquisition infringes Singapore’s law which prohibits declared or potential mergers that lessen competition.
The Competition and Consumer Commission of Singapore (CCCS) said it needs to assess further the extent to which Singapore Airlines competes with the “merged entity” along these routes given that it is a joint venture partner with Tata Sons in Vistara and a prospective partner with Vistara in the commercial co-operation framework agreement. “CCCS also needs to assess further whether the competitive constraint from other airlines such as IndiGo would be sufficient post transaction. Accordingly, the CCCS needs to further review the competitive effects of the transaction in further detail,” it said.
“The regulator would like to ascertain that the acquisition of Air India does not lead to appreciable adverse effect on competition and that is why Tata group has been asked to make certain commitments,” a lawyer remarked.
Tata Sons did not comment.
Vistara CEO Vinod Kannan has been quoted as saying that the airline functions as a separate entity and treats Air India as a competitor. “We will be keeping an arm’s length (from Air India) on issues that are customer friendly or commercially sensitive,” he had said in February.
Mayur Patel, regional sales director of aviation data analytics firm OAG believes acquisition will not pose threat to competition.
“Based on the schedule capacity data for May 2022 period, it can be concluded that the capacity share for merged entity of Air India, Air India Express and Vistara would be 20 per cent for which this should not pose any anti-competitive threat for the India to Singapore market. On the other hand, IndiGo has a capacity share of 15 per cent on the country pair during the same period,” Patel said.
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