India flags antitrust concerns with planned merger between Air India, Vistara

India flags antitrust concerns with planned merger between Air India, Vistara

India’s antitrust body is scrutinizing Air India’s planned merger with Vistara and has asked the company why it should not be investigated further over competition concerns, potentially delaying the process, two sources with direct knowledge said.

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It is a new challenge for formerly government-owned Air India, which Tata Group took over last year. The Indian airline has ambitious plans to modernize its fleet, operational systems and revenue management.

In a bid to streamline businesses, Tata in November said it was merging its two full-service carriers Air India and Vistara to create a bigger airline that will take on local rivals such as IndiGo and Middle Eastern carriers that dominate outbound traffic from India.

The Competition Commission of India (CCI) has flagged that on some routes and categories - such as business class travel - the merged entity could have a monopoly, said one of the two sources, who declined to be named as the matter is confidential.

The CCI has issued a so-called “show cause” notice to Air India to explain its position, and they have 30 days to respond, the two sources said.

The CCI, Air India and Vistara did