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Business News/ News / India/  Air India a long-term investment: Singapore Airlines CEO
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Air India a long-term investment: Singapore Airlines CEO

Singapore Airlines CEO believes that the launch of Vistara, a joint venture with Tata Sons, was driven by the expanding air traffic potential in India.

Singapore Airlines plans to contribute to the growth of Air India once its merger with Vistara is complete, citing the valuable slots and rights held by Air India. Premium
Singapore Airlines plans to contribute to the growth of Air India once its merger with Vistara is complete, citing the valuable slots and rights held by Air India.

Singapore: Air India is a promising long-term investment opportunity for Singapore Airlines, considering the growing travel interest among Indians, and the valuable slots and rights held by the airline, Singapore Airlines chief executive Goh Choon Phong said.

“It is not something that we have a short-term view on, this is a strategic long-term investment. India is a high-growth country, it is going to be third largest economy and is (currently) the third largest travel market in the world. It has got lots of potential. We would like to participate and directly contribute to that growth," he said at a roundtable discussion.

Singapore’s flag carrier still believes that the launch of Vistara, a 49:51 joint venture with Tata Sons, was spurred by the expanding air traffic potential in India, and even as the airline undergoes a merger with Air India, it has earned the recognition of being a premier carriers. “I believe Vistara is widely recognized as the best carriers in India. It is something that we created with our partners... and we believe our partners and customers in India will be proud (of it)," Phong added.

In November 2022, the Tata Group announced the merger of its full-service joint venture Vistara with Air India. According to the agreement, Singapore Airlines will hold a 25.1% stake in the merged entity, and the remaining 74.9% stake will be held by the Tata Group.

“Once that transaction goes through, and we are officially a partner (in Air India), we can then look at ways of contributing towards building it for Air India as well. The value of Air India is clear, you have the valuable slots and rights, and the ability for it to connect with the rest of the world cannot be understated."

Singapore Airlines’ 49% stake in Vistara will convert to approximately 20.6% in the expanded Air India. To achieve an additional 4.5% stake, Singapore Airlines is obligated to pay Tata Group 2058.5 crore in cash upon completion of the merger, bringing the total holding to 25.1% in the merged entity.

Additionally, the carrier can invest 5,020 crore to fund the Tata Group’s fleet modernization, aircraft induction as well as Air India’s other operational plans for FY23 and FY24. “So, the 25.1% is the current agreement between the shareholders. The latest development is decision by Competition Commission of India to approve the Vistara and Air India merger. If all goes according to plan when approvals are received, we will end up owning 25.1% with an injection of about $250 million. I am actually not foreseeing any additional infusion."

The timeline for completion of the merger should be “more or less" on track and will happen by March, he added.

“Whenever our partners require our assistance in different areas, we will provide our knowledge. Once all this has been approved and we are shareholders of Air India, of course, we would like to contribute our part to make sure that Air India can become one of the leading carriers of the world," the top executive said.

On the India operations and the growing low-cost carriers’ expansion in short and medium-haul markets, Singapore Airlines said that globally, there are examples of deployment of a full-service carrier capacity to a low-cost and vice-versa depending on the market needs.

“Having both vehicles within the same group gives us the flexibility to make sure the right vehicle is deployed with appropriate capacity to the right market," he said.

The reporter is in Singapore at the invitation of Association of Asia-Pacific Airlines.

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Published: 10 Nov 2023, 12:00 AM IST
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