The Competition Commission of India has been scrutinising the planned merger of Air India, which Tata Group took over last year, with Vistara, a joint venture between Tata and Singapore Airlines (SIAL.SI). The merged airline would challenge local rival and market leader, IndiGo (INGL.NS).

Sharing new details of CCI’s concerns, the first source said the watchdog’s confidential notice to the airline has raised worries about the combined entity’s market power on many international and domestic routes.

The CCI also said its initial review showed the market share of the Tata Group could be more than 50% in at least seven domestic markets, raising competition concerns, the person added.

Following a request by the company, CEO Wilson and the General Counsel of Tata Group, Sidharth Sharma, in recent days met India’s antitrust chief, Ravneet Kaur, to discuss the ongoing merger process, said two of the four sources.

Such meetings are typically held to find a way forward and assuage the CCI’s concerns, sources said, declining to elaborate further or be named as the talks are confidential.

The CCI, Tata Group, Air India and Vistara did not respond to emails seeking comment.

Reuters reported in June that the CCI has been concerned that some Air India-Vistara merged routes and categories – such as business class travel – could have a monopoly.

The “CCI has asked how Tata plans to think about pricing strategies … The (market) power they will have, how will all this affect pricing,” said the first person.

The CCI’s scrutiny comes amid growing concerns within the industry about a duopoly, with a merged Air India-Vistara and IndiGo controlling more than 75% of the domestic market as smaller rivals such as SpiceJet (SPJT.NS) and Go First struggle.

For the first half of 2023, IndiGo’s market share stood at 58%, while the Tata Group airlines, including AirAsia India, accounted for 25%.

Air India is yet to respond to CCI’s concerns, two of the sources said. Once they do, the watchdog will review their submissions to decide on the merger, or has the option to order a broader review if it’s not satisfied.

Vistara CEO Vinod Kannan said last month Air India-Vistara merger was expected to receive all regulatory approvals by April 2024.

Indian budget airline IndiGo (INGL.NS) announced at the Paris Airshow on Monday the biggest ever plane order by number of aircraft with a deal for 500 Airbus (AIR.PA) narrowbody jets.

A day later, rival Air India firmed up an order for 470 Airbus and Boeing (BA.N) aircraft that, until Monday, had been the industry leading plane deal.

With a total of almost 1,000 jet orders between them, IndiGo and Air India are betting an economic boom and growing middle class will spur demand for domestic air travel, and new jets will help them grab a bigger share of international traffic.

The number of domestic air passengers in India is expected to surge to 350 million by 2030, up from 144 million in 2019, with international air travellers up to 160 million from 64 million in 2019, according to aviation consultancy CAPA India and government data.

The number of airports in India is also set to climb to 200 over the next five years from 150 today, as the government looks to connect the country’s remotest areas by air.

“It is time to seize the skies,” civil aviation minister Jyotiraditya Scindia told reporters in New Delhi on Tuesday, adding the new planes would help Indian airlines expand at home and across continents.

IndiGo, which operates a fleet of 300 planes, is yet to take delivery of some 500 jets from previous orders with Airbus.

This puts the total deliveries by planemakers to Indian carriers at more than 1,500 over the next decade and beyond – double India’s existing fleet of 700 planes across all airlines.

That makes India a key market for planemakers, especially Airbus which has bagged the bulk of new orders, outdoing U.S. rival Boeing, and engine manufacturers whose wares will be put to test.

Leasing Concerns

But while the opportunity in India is big, so are the risks, says Ameya Joshi, an independent aviation analyst.

The recent failure of Go First, the third Indian airline to go under in 11 years, has exposed a gap in local regulations over the protection of rights of foreign leasing firms that finance many large plane deals. Indian budget carrier SpiceJet (SPJT.NS) is also facing the ire of lessors over unpaid dues.

Leasing companies warn that restrictions on repossessing their assets in case of defaults will drive up costs for all Indian airlines – even for IndiGo and Air India.

“There needs to be a huge regulatory revamp to protect lessors’ interests. It will eventually help Indian airlines by lowering risk and moderating lease rental costs,” said Joshi.

India is a critical market for lessors. Sale-and-leaseback deals – where airlines sell planes to lessors to free up capital and then rent them back – accounted for 75% of plane deliveries in India from 2018 to 2022, compared with a global average of 35%, data from aviation analytics firm Cirium shows.

This is causing concerns among some leasing companies that fear being too exposed to a market fraught with risks.

Some analysts also say that the airlines could be over-ordering jets in pursuit of the same passengers.

The bullish outlooks from IndiGo and Air India, which together control about 80% of the domestic market, suggest both are starting to benefit from their scale compared to rivals.

Joshi expects annual passenger growth in India to taper to 6%-10% going forward, coming off highs of 20% seen in the immediate aftermath of the pandemic. But he thinks the market will stabilise as weaker airlines will fall by the wayside.

“India is moving towards becoming a stable market where growth will not be as high but airlines will be profitable and connectivity will be better despite higher fares,” he said.

New Delhi (AP) — A replacement plane for an Air India flight diverted to Russia because of an engine problem has landed in San Francisco, carrying all passengers and crew.

The original Boeing 777, which left New Delhi carrying 216 passengers and 16 crew members, landed at Magadan airport in Siberia in Russia’s far east on Tuesday. The plane had “developed a technical issue with one of its engines,” Air India said.

The replacement plane arrived in San Francisco at 12:07 a.m. Thursday local time, according to the website Flight Aware.

In Washington, U.S. State Department spokesperson Vedant Patel said fewer than 50 American citizens were on the plane and the department was not aware of any of them reaching out to the U.S. Embassy in Russia or other diplomatic posts.

Passenger Girvaan Singh Kahma, 16, who was traveling with his uncle and brother, said they were barred from leaving the hostel in Magadan and were unable to use their credit cards because of sanctions over Russia’s war on Ukraine.

“The first day and a half was really hard for all of us,” he said. “The weather went to 3 to 4 degrees (Celsius) in the morning, and in the night it was bitter cold,” he said, adding that it was getting better with food and a place to sleep.

“The Russian soldiers, the Russian police, the authorities, everyone working in the hostel has been treating us extremely well,” he said.

The plane, a Boeing 777 carrying 216 passengers and 16 crew members, landed safely at Russia’s Magadan airport in the country’s far east on Tuesday, Air India said in a statement.

The flight “developed a technical issue with one of its engines,” the statement said, adding that the aircraft was undergoing safety checks and the passengers were being provided support on the ground.

Vedant Patel, a U.S. State Department spokesman, said that American citizens were likely on the flight but could not immediately confirm how many. He said his understanding was that Air India would be sending a replacement aircraft to Russia so the passengers could continue their travel to the U.S.

“We are continuing to monitor the situation,” Patel said.

Girvaan Kaahma, 16, was traveling on the flight with his uncle and brother. He said they are barred from leaving the hostel where they are staying in Magadan and can’t use their credit cards to buy items from the vending machine because of sanctions over Russia’s war on Ukraine.

Kaahma said the airline told the passengers they would likely leave Russia for the U.S. on Thursday.