This was bound to happen, and makes eminent sense. My Ph.D. was on Diversification Strategy (a long time ago), based on American company data. Synergy through mergers and acquisitions was also a small part of that.
Running three different airlines is not a joke. So it makes a lot of sense after acquiring Air India, for the Tatas (and Singapore Airlines, the partner) to merge the two similar premium value airlines into a single entity. Hopefully, this will make it a much more efficient operation, and might help profitability in the long run, though in India that tends to be a long road.
With Jet showing no sign of coming back, Indigo also needs a serious competitor, even if it's not a low cost one. This merger might just give the customer that much-needed option, as the routes operated by the combined entity in the domestic market would rival Indigo to an extent.
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