The Tata Group Is Merging 4 Airlines Into One. Would It Shake India's Aviation Sector?

It was long in the works. A few weeks after Air India—now owned by the Tata group—bought a controlling stake in low-cost carrier (LCC) AirAsia India, the merger of full-service carrier Vistara was announced. The deal was set in motion the moment New Zealander Campbell Wilson was hired from Singapore Airlines’ low-cost subsidiary Scoot to head Air India. So, it came as no surprise when a delighted Wilson commended Vistara for achieving a lot ever since the 51:41 Singapore Airlines and Tata group JV commenced operations in November 2013.

“The skills, people, systems and processes that have driven Vistara’s success will strengthen and accelerate Air India’s Vihaan.AI programme, and enable Air India to more quickly attain the size, reach and quality befitting of a world-class airline,” stated Wilson. The integration of all Tata group carriers is closely linked to the success of Vihaan.AI, a five-year plan chalked out by Air India to reclaim its position as a leading domestic and global carrier.

“With the coming together of Vistara and AirAsia India into Air India, the deck is cleared for a rapid integration and a clear road map for growth under the Air India brand,” says Jagannarayan Padmanabhan, Director & Practice Leader for Transport & Logistics at CRISIL Infrastructure Advisory.

The integration will be completed by 2024. As part of the deal, Singapore Airlines will be investing Rs 2,059 crore for a 25.1 per cent stake in Air India. “The merger will enable the coordination of pricing and schedules, which will help with network synergies,” says Satyendra Pandey, Managing Partner at aviation advisory AT-TV.

Reacting to the announcement, an industry insider, requesting anonymity, said that with two new metro airports—Delhi (Noida) and Mumbai (Navi Mumbai)—and a good economy, the completion of the merger would mark a momentous year for the aviation sector in India. “One expects that the Tatas would go full throttle with what appears to be very good timing. If capacity introduction coincides with market expansion over a relatively long drawn out period, it does help provide an airline ample cushion to survive through the next low economic cycle,” says the person.

However, this might put the Tata group in a piquant situation: the Herculean effort of merging four different cultures, namely Air India, Vistara, AirAsia India and Air India Express. Plus, despite its size, the merged entity isn’t present in the thriving regional airspace that is driving the next phase of India’s aviation growth.

Source: Business Today