Tata  group to plot flight path for aviation business

A merger of budget airline AirAsia India with full-service carrier Vistara is among options considered by the Tata group as it gears up for a wider play in the aviation business.

The salt-to-software conglomerate has set up a strategy team headed by Tata Sons Pvt. Ltd’s chief financial officer Saurabh Agrawal to explore options, including mergers, consolidation and rebranding of its airline ventures, two people aware of the matter said, requesting anonymity.

Tata group, which placed an expression of interest for Air India, recently announced its decision to raise its stake in AirAsia India to 84% by buying out a part of its Malaysian partner AirAsia Bhd’s shares.

A decision on the way forward with AirAsia India is expected to be taken by March-end by when there will likely be more clarity on Tata’s bid for Air India, the people cited above said.

“A final decision in this regard depends on whether AirAsia continues as a minority investor in the airline or not,” one of the two people cited above said. “In the event of AirAsia Bhd continuing to stay invested in AirAsia India, the Tata group may not be required to pay a royalty for the use of the brand name, which is a key factor,” the person added.

Tata group also owns 51% of Vistara, with the rest held by Singapore Airlines (SIA). Meanwhile, under the share-purchase pact with AirAsia Bhd, Tata Sons has the option to raise its stake to 100% in AirAsia India.

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