The Tatas have begun the task of consolidating their airlines businesses through a proposed merger — of AirAsia India Pvt Ltd (AAIPL) with Air India (AI) — and bringing together all these entities under one roof at a mega office in Gurgaon. AI has notified the Competition Commission of India (CCI) about its plan to merge AAIPL into it, thereby beginning the legal process of this consolidation. AAIPL started operating in 2014, a year before the second Tata JV Vistara, and still does not have rights to fly abroad.
“The proposed combination relates to the acquisition of the entire equity share capital of AAIPL by AI, an indirect wholly owned subsidiary of Tata Sons Private Limited (TSPL). At present, TSPL holds 83.67% of the equity share capital of AAIPL. The proposed combination is notifiable under… the Competition Act, 2002,” the notification to CCI says.
AAIPL is a joint venture in which Tatas have 83.67% stake and the remaining 16.33% switch AirAsia. “The Proposed Combination will not lead to any change in the competitive landscape or cause any appreciable adverse effect on competition in India, irrespective of the manner in which the relevant markets are defined,” it adds.
Additionally, the Tata Group has begun move to have greater synergy between its four airlines by shifting them to one mega office at Delhi’s suburb of Gurgaon. It has identified an office space of upto 70,000 square feet which can be leased “immediately”. Working with Tata Realty, the group is now finalising its office requirement and plans to start the transition at the earliest.
“Considering the existing 4 (airlines) and one JV (AI-SATS) as part of the Tata fold, it has been decided that to optimise resources, increase team work and have higher synergies at work, the various entities will move together into a complex in Gurgaon to start with as far as possible in a phased manner. A new office space on NH8 has already been identified where we have an option to lease up to 700,000 sq ft immediately,” a communication sent to the heads of these five Tata aviation entities says.
“We now need to finalise our exact space requirement and start planning the transition to this new space immediately. We are targeting to move in the next 2-3 months. For this purpose, to develop the strategy plan, the task has been entrusted to Harpreet A De Singh, ED headquarters, along with the Consultants from Ernst and Young,” it adds.
The entities have been asked to give information about their required office space to this team “in a timely manner, to facilitate this strategic transformation and consolidation at the earliest.” This shift will consolidate Gurgaon’s pre-eminence in Indian aviation as it already houses IndiGo and SpiceJet. Mumbai, one the hub of airline headquarters, now houses few relatively big airlines like GoAir.
The Tata Group had taken over AI and AI Express this January-end. It is yet to spell out the consolidation among the four airlines, with the options being: a low cost by merging AI Express and AirAsia India, AI and Vistara; one full service and a low cost; AI (merging all three) and Vistara till the latter’s 49% stake holder Singapore Airlines agrees to a merger with AI. The group is trying to get a CEO for its airline business to finalise the future course of action.
Source : TOI