BENGALURU/NEW DELHI (Reuters) -India's antitrust body on Friday approved the merger of Tata group-owned Air India with sister airline Vistara, subject to compliance with voluntary commitments made by the carriers.
The approval 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, while smaller rivals such as SpiceJet and Go First struggle.
Tata said in November it was merging its two full-service carriers Air India and Vistara, a joint venture between Tata and Singapore Airlines, 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) had flagged that on some routes and categories - such as business class travel - the merged entity could have a monopoly, raising competition concerns, sources previously told Reuters.
Reuters reported last month that Air India Chief Executive Campbell Wilson had held talks with India's antitrust head on the merger, weeks after the watchdog raised concerns about potential market domination.
The regulator on Friday approved the proposed deal, "subject to compliance of voluntary commitments offered by the parties," but did not elaborate on the voluntary commitments made by the airlines.
The Tata group last month unveiled a new logo, branding and plane livery for Air India as part of a multi-million dollar transformation of the former state-run carrier.
Air India and Vistara, which will be rebranded as Air India, did not immediately respond to a Reuters request for comment.
(Reporting by Biplob Kumar Das in Bengaluru and Tanvi Mehta in New Delhi; Editing by Pooja Desai and Shinjini Ganguli)