They indicate that the management teams will remain distinct for at least a year after receiving all necessary approvals for the proposed merger, anticipated to occur either this year or the next.
Delay in Air India Vistara Board Merger
Tata Sons aims for Air India to attain consumer trust and operational efficiency comparable to Vistara, considering the latter’s robust brand reputation.
Integration plans are contingent on aligning the airlines’ networks, consumer touchpoints like apps and websites, and airport resources, which entails a comprehensive overhaul. Tata Sons refrained from providing any comments on the matter.
A senior executive mentioned that the operational merger might extend into 2024 due to the time-consuming process of combining the networks and operations of the airlines. This merger is part of the Tata Group’s effort to consolidate its aviation businesses.
The amalgamation of Air India and Vistara aims to create a full-service airline, while Air India Express (IX) and AirAsia India (I5) are joining forces to establish a low-cost airline subsidiary of Air India. Singapore Airlines (SQ), holding a 49% stake in Vistara, will have a 25.1% stake in the merged Air India.
A senior official from the airline highlighted that Vistara is an already established and efficient brand with a strong and credible reputation built over the years in terms of quality and service.
In comparison, Air India faces several challenges to achieve a similar level of brand equity. As a result, there is a strategy to maintain separate branding until Air India reaches a comparable standard of operations.
Challenges Faced by Air India
Tata initially considered phasing out Vistara and adopting the Air India brand to cut costs and boost its domestic market share, along with fostering a cohesive corporate culture.
However, the sources mentioned above indicate that, even with the necessary approvals, the group will not hastily abandon the Vistara name. Brand expert Santosh Desai suggests that retaining the Vistara name is a wise decision.
Desai emphasizes that Vistara currently holds the highest regard among airlines in the country, and sacrificing such a strong brand for Air India, which is not yet prepared, would not be a prudent strategy.
According to him, addressing Air India’s legacy issues and completely transforming it, including new aircraft and a customer service mindset, will be a lengthy process spanning several years.
He acknowledges that the Tata group is putting in considerable effort, but the magnitude of the task is significant.
The merger is expected to receive approvals from the National Company Law Tribunal (NCLT), the Ministry of Civil Aviation, and the Department for Promotion of Industry and Internal Trade (DPIIT) by the middle of this year.
Revamping Air India’s Customer Journey
Executives assert that Air India must make significant strides to align with Vistara in terms of customer-facing experience and operational efficiency.
This encompasses aspects such as on-time performance, service quality, and the overall in-flight experience.
To address these challenges, Air India not only plans to introduce new aircraft but also aims to revamp the airline’s interiors, known for their current state of disrepair.
While Vistara has successfully established itself as a premium carrier with a limited international presence, the focus now shifts to leveraging synergies between the two airlines.
This involves strategies to avoid direct competition, eliminate redundant staffing and services, and optimize personnel and services across various points.
“One of the sources mentioned that there are some routes, including international ones, where Air India and Vistara currently operate almost simultaneously.
The plan is to eliminate such duplications, creating a network where the airlines complement each other rather than compete,” shared one insider.
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