CCCS seeks public views on SIA, Vistara's proposed commercial cooperation

Singapore

THE Competition and Consumer Commission of Singapore (CCCS) is seeking public feedback on the proposed commercial cooperation framework agreement between Singapore Airlines (SIA) and Tata SIA Airlines, which operates under the brand name Vistara.

SIA announced on Monday that it has signed an agreement with its Indian joint-venture partner Vistara that will build on an existing partnership between the two carriers. It said the agreement - an extension of an earlier codeshare partnership that kicked off in 2017 - will require the necessary regulatory approvals.

In a press statement on Tuesday, CCCS said it received a joint application from SIA and Vistara on the proposed cooperation, and accepted the application as complete on Nov 30.

It is now assessing whether the proposed cooperation would infringe Section 34 of the Competition Act, which prohibits agreements or concerted practices by undertakings which prevent, restrict or distort competition in any market in Singapore.

Vistara is a joint venture between Tata Sons and SIA, with SIA owning a 49 per cent stake, and Tata Sons owning the other 51 per cent. The airline operates in India, and began direct flights between Singapore and the Indian cities of Delhi and Mumbai last year.

CCCS noted that the parties entered into a commercial cooperation framework agreement on Feb 13 this year, in which they agreed to cooperate on - among other things - scheduling, pricing, sales and marketing and other commercial areas.

The proposed cooperation may extend to SIA's subsidiaries SilkAir and Scoot Tigerair, subject to agreement of the parties.

SIA and Vistara have overlap on 16 air passenger routes between Singapore and India prior to Covid-19, on direct and non-direct basis.

CCCS noted that the parties have said the proposed cooperation is unlikely to result in any adverse effects on competition. The reasons given include the aggregation in their passenger share is not significant on the overlapping routes, and the parties are already economically connected, with SIA owning a 49 per cent stake.

Both sides also noted that there are many existing competitors on the overlapping routes, and the barriers to entry are low, which also facilitates entry by potential competitors.

CCCS noted that SIA and Vistara have said the proposed cooperation will result in "significant consumer and economic benefits" as well as efficiencies.

These include increased likelihood of expedited and more sustainable re-instatement of capacity in the current Covid-19 circumstances, and improved connectivity between Singapore and India - which can benefit the aviation and tourism sectors.

The airlines can also introduce new routes, and improve fare availability at all fare levels, as a result of inventory and pricing coordination.

The public can provide feedback to CCCS, with the closing date for submissions on Dec 21, 2020.

SIA shares closed at S$4.40 on Tuesday, up S$0.02 or 0.5 per cent.