Based on the sources, a Vistara representative had previously stated that until instructed differently by its parent companies, the airline would continue to focus on organic growth in response to a Business Today inquiry about a potential merger with Air India.
Tatas, Air India and Vistara
Singapore Airlines and Tata Sons have a 49:51 joint venture called the full-service carrier (FSC). Regarding the securities of Vistara and Air India, as well as a “possible integration” of the two airlines, Singapore Airlines announced in a release on October 13 that it was in “secret conversations” with the Tata group.
Industry experts describe the announcement as being in line with expectations and claim that an alignment of operations will open up considerable prospects by assisting in the merged company’s ability to carve out a position in the fiercely competitive Indian aviation market.
According to Jagannarayan Padmanabhan, Director & Practice Leader for Transport & Logistics at CRISIL Infrastructure Advisory, Air India can significantly benefit Vistara with access to desirable ground slots in international markets. It presents Air India with a wonderful opportunity for a brand makeover to become a customer-centric airline.
Air India Express will lease 2 B737s from Vistara to enhance its network in the upcoming winter schedule.
— JetArena (@ArenaJet) October 26, 2022
Both aircraft will be inducted in November and December resp.
The move is to consolidate as well as to tap the synergies in TATA group airline business. pic.twitter.com/aSFlMgfef4
Merging won’t be Easy
Based on the sources, it states that it won’t be simple to combine the two. In contrast to Air India, which has very little to recommend its domestic operations, Vistara has built a reliable, high-quality local airline. A merger makes perfect sense, but regrettably, it also implies that the Vistara name and Air Operator’s Permit will eventually need to be retired, according to an industry insider who wished to remain anonymous.
Furthermore, the insider added that Vistara should be given the responsibility for setting and controlling the product and domestic operations so that their procedures take precedence in optimizing the domestic operations of Air India. To make the transition as painless as possible, the Air India management would need to pay close attention to the absorption of Vistara employees.
In April, Air India also put out a proposal to buy out AirAsia India’s remaining stock. Currently, Malaysia’s AirAsia Investment owns the remaining shares in the low-cost carrier, leaving Tata Sons with an 83.67% ownership.
Therefore, the creation of an organization with approximately 200 aircraft and more than 800 local and international departures results from the merging of all Tata group airlines under the Air India name. As a result, it would surpass IndiGo, the largest airline in the nation.
Air India Making an Announcement
In addition, Air India is anticipated to make one of the largest aircraft orders in recent memory, which would nearly triple the size of its fleet and enhance its market share. But in the aviation industry, market share does not equal pricing power or profitability. IndiGo, a market leader in the home market, is still developing.
According to Satyendra Pandey, Managing Partner at the aviation consulting firm AT-TV, new airlines are focusing on India in the global market while established carriers are improving their products and services. But one thing is certain: in the next months, the formation of a duopoly in the Indian sky will move quickly.
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