The Tata Group has started negotiating with Singapore Airlines, the joint venture partner in Vistara. The proposal abandons a non-compete clause and merges it with a proposed bid for the debt-laden Air India.
In the wake of the Coronavirus pandemic, the centre has tried to postpone bidding for Air India four times.
SIA will budge in and accept to bid on the proposal. However, if the deal fails to come through, the Tata Group is all set to bid solo for the ailing national carrier. Tata Sons would go ahead with the Air India bid irrespective of the outcome of the joint venture.
Currently, Tata Group runs two airlines through joint ventures, Vistara (SIA) and Air Asia India (Air Asia Berhad). Comparatively, the Tata airlines business is not in good financial condition. If Tata Sons buys out Air India, the group can consolidate its entire airline businesses under a single entity.
The government wants Tata Group to acquire and run Air India and they claim the company has pledged to be helpful following privatization on backing the group in dealing with bureaucratic work.
A group director said, “Our group chairman has clearly stated that the airline businesses have to be consolidated and there cannot be multiple airlines. So, Air India being a full-service carrier, it is only sensible that it will come under the Vistara business which is a full-service carrier too. So, we are hopeful that our partner will be willing to participate in future plans that include Air India.”
The pact with SIA clearly mentions that Vistara has an exclusive right to undertake “full-service carrier” service within the overall aviation business of the Tata Group. If Tata Group bid solo for Air India, then it would breach the deal conditions.
