Air India-Vistara Merger: What Changes | Former Air India Executive Director Explain

Summary

In an interview with NewsX, Mr. Jitendra Bav, former Executive Director of Air India, discusses the strategic benefits of the merger between Air India and Vistara. He emphasizes the need for a strong international airline to compete with global carriers and highlights the improvements made by Tata since acquiring Air India, such as refurbishing aircraft, enhancing service quality, and reengineering work practices. Bav anticipates that the merger will create a formidable player in the aviation industry, both domestically and internationally, and will ultimately benefit consumers through increased competition and potentially more affordable fares.

Takeaways

• 😀 The merger of Air India and Vistara is a strategic move to create a strong international airline capable of competing with global carriers like Emirates and Southeast Asian airlines.
• 🕒 The merger process took over two and a half years due to the need to refurbish and upgrade Air India's fleet and services to meet international standards.
• 🔄 The integration aims to harmonize manpower, network thinking, and growth programs, leveraging Vistara's reputation for quality to enhance Air India's image.
• 🌟 Post-merger, Air India is expected to improve its service quality, induct new aircraft, and expand its operations, aiming to compete with top airlines within a year.
• 🌐 The merger is not just about the domestic market; it's crucial for India to have a formidable player in the international aviation sector.
• 🛫 Air India's refurbished and new aircraft, along with Vistara's quality service, will contribute to changing the negative perception and creating a new image for the combined entity.
• 📈 The combined market share of Air India and Vistara could challenge the dominance of Indigo in the domestic market, promoting healthier competition.
• ✈️ Internationally, the merged entity plans to operate direct flights from various Indian cities, reducing reliance on Gulf and Southeast Asian carriers for international travel.
• 💼 The merger is expected to benefit consumers by providing more choices and potentially driving down fares due to increased competition and capacity induction.
• 🌟 The long-term vision is for Air India to become a source of pride for Indian aviation, competing effectively on the global stage within the next few years.

Q & A

What was the main reason behind the merger of Air India and Vistara?

The merger was a natural progression after Tata acquired Air India, as it was not feasible for the same promoter to run two competing airlines. The goal was to create a strong international airline that could compete with global carriers like Emirates, and the merger was timed to create harmony in manpower, network thinking, and growth programs.

How did the merger impact the perception of Air India's quality?

Air India had a negative perception in the past, but with the merger and the induction of new aircraft like the A350s, the quality has been upgraded. The merger is expected to blend the good quality product of Vistara with the upgraded Air India product, leading to a perceptual change and a new image for the combined entity.

What changes did Tata bring to Air India in the 2.5 years post-acquisition?

Tata refurbished old aircraft, inducted new ones like the A350s, and initiated VRS schemes to bring in new employees, leading to a cultural change and reengineering of work practices. This was aimed at aligning with customer-friendly systems and improving service quality.

How does the merger plan to enhance Air India's international presence?

The merger aims to expand Air India's international operations by not just operating out of Delhi and Mumbai. They plan to start direct flights from other Indian cities like Bangalore to various international destinations, reducing the reliance on Gulf and Southeast Asian carriers for international travel.

What is the expected impact of the merger on domestic market competition?

The combined market share of Air India and Vistara could challenge the dominance of Indigo, stimulating competition and potentially leading to better services and more competitive fares. The merger is expected to provide a formidable domestic airline to compete with the market leader.

How does the merger influence the consumer experience and fares?

The merger is expected to increase competition, which could lead to more affordable fares as both airlines have ordered a large number of aircraft and need to fill them. However, the consumer experience will also depend on the balance between service quality and the need to generate revenue for expansion.

What is the role of Singapore Airlines in the post-merger scenario?

Singapore Airlines, with a 25.1% stake post-merger, is expected to contribute technology, innovative work practices, and better work standards to Air India, enhancing the overall quality and efficiency of the combined entity.

How does the merger address the issue of market share and competition?

The merger combines the market shares of Air India and Vistara, potentially reaching close to 30%, which could provide a strong challenge to Indigo's dominance. This is seen as a move to create a stronger airline that can compete effectively in the market.

What are the expectations for Air India's growth in the next few years?

With the merger and the induction of new aircraft, Air India is expected to expand its fleet and operations both domestically and internationally. The goal is to become a major player in the international market, competing with the likes of Emirates and other global carriers.

How does the merger plan to balance quality service with the need for financial growth?

The merger aims to achieve this balance by offering a full-service carrier experience with Air India and leveraging the efficiency and innovation of Vistara. They plan to maintain quality service while keeping fares affordable to stimulate market growth and fill the new aircraft being inducted.