Since the Tata Group acquired Air India, rumours have circulated that the country's oldest multinational company may merge the debt-ridden carrier with Vistara.
In 2013, Tata Sons, the Tata Group's main holding company, formed Vistara as a joint venture with Singapore Airlines (SIA). However, the airline began service on January 9, 2015. The joint venture is 51% owned by the Tata Group.
The Tata Group, on the other hand, gained ownership of Air India and its subsidiary Air India Express on January 27 after winning the airline's bid on October 8 of last year.
AirAsia India is owned by the Tata Group to the tune of 83.67%, with Malaysian carrier AirAsia Berhad holding the remaining interest.
However, according to Philip Goh, Regional Vice President of the International Air Transport Association (IATA) for Asia Pacific, Tata Groupo still has a lot of difficulties to work out before the Air India-Vistara merger is finalised.
Goh said, "Both (Vistara and Air India) are full- service carriers. Vistara is still quite small and although they have been in business for 5-6 years, they are still loss-making. It is not easy to turn a profit in India. A lot of issues to overcome."
Goh said he is sure that some sort of discussion must be happening between the Tata Group and Singapore Airlines on the merger of Air India and Vistara.
"I think Tata's initiative (to merge AirAsia India with Air India) within their own group is sensible. I think that if you have four vehicles within the same group, you have to find some ways to rationalise the synergies within the group," Goh said.