Singapore Airlines has reportedly declined to join the Tata Group’s bid for Air India. The two are currently in a joint-venture agreement in full-service airline Vistara. However, Singapore Airlines has waived the non-compete clause in Vistara’s contract, allowing Tata to bid for Air India alone.
Waiver
Singapore Airlines (SIA) has said no to any plans of jointly bidding with Tata for Air India. The flag carrier has had been heavily impacted by COVID-19, racking up billions in losses and cutting jobs. At such a time, spending billions on investing in Air India does not seem prudent.
However, SIA has waived the non-compete clause in Vistara’s contract. While Tata owns 51% and SIA 49%, the contract very likely includes a clause that prevents Tata from buying or start another full-service carrier (there is an exception for Tata’s AirAsia India ownership). This clause could have caused a bottleneck in the sale process, which is why Tata originally bid for Air India through its AirAsia subsidiary.
SIA’s decision to give Tata a waiver clears the way for Tata to pursue and potentially take over Air India in the coming months. If it were to win the bid, Tata would own two competing full-service carriers and one low-cost one.
