The main goal of modern axial compressor development is to increase the power to weight ratio with higher efficiency. In the present investigation, highly loaded single stage axial compressor with tandem stator vanes is used. Tandem vanes help in attaining the compact compressor stage along with high pressure loading. It is designed for a stage pressure ratio of 2, mass flow rate of 9.02 kg/s operating at 30800 rpm resulting in transonic flow field. The aerodynamic performance of this compressor detoriates due to the tip leakage and secondary flows. Steady-state numerical investigation is carried out to study the flow structures near the tip region of transonic rotor and how different tip gaps influence the overall performance of the compressor. Further the effects of tip leakage flow variation on the performance of tandem vanes are also highlighted. Transonic fan stage with baseline tip gap of 0.5mm is analyzed along with different tip clearance values ranging from 0 % to 3 % of axial chord. Three-dimensional viscous Reynolds Averaged Navier Stokes (RANS) equations are solved using SST k-ω turbulence model. Computational domain discretized with high quality hexahedral elements (Y+ < 2) in AUTOGRID, Numeca. The numerical procedure is verified against the experimental results of Rotor37 transonic rotor test case. Tip leakage losses contribute a substantial amount to the total loss of stage. Overall performance and the stall characteristics for the compressor stage has been evaluated for different tip gap variations.. Further, the topological properties are exploited to visualize the critical points and separation lines on rotor and tandem vanes. Increase in rotor total pressure loss coefficient is observed with increasing tip gap. In contrary, overall total pressure loss coefficient improves for smaller tip gap values and then detoriates. It is observed optimum tip gap height lies close to the 1.125mm, 2% of baseline design value. Copyright © 2019 ASME.