Operational challenges to continue even as curtains close on Vistara

Its curtains down for brand Vistara midnight on Monday as it integrates with Air India, but operational issues post-merger is expected to become the toughest challenge at hands for the salt-to-software conglomerate Tata group.

Experts, tracking the merger of Vistara —jointly owned by Tata Group and Singapore Airlines—with Air India, say the financial merger process is over but the success of this merger will depend once the people and processes change and that is going to be extremely difficult task.

 “The final aspect of merger comes into play when the people have to merge. The ethos of the two companies are entirely different. Vistara has played at a high platform and Air India is similar to a PSU and aim is to imbibe the ethos of smaller entity into bigger. It is going to be long drawn process and not an easy task,” says Karan Singh, co-founder of QSS Global, a New Delhi-based consulting firm.

The merger leaves India with the one full service carrier (FSC) flying in the skies. Indigo has announced to launch business and premium economy services starting this month, but experts said it is better to call it FSC lite.

While Indigo has a 62.5% share of the Indian aviation market, joint share of the Air India and Vistara will be 25%, according to September-quarter data by DGCA. As part of the transition, Air India has announced measures to streamline the transition for passengers. In the first month after the merger, nearly 115,000 customers who had purchased Vistara tickets pre-merger are expected to fly on unified Air India.

Issues at hand

Ahead of the merger, the Air India Group announced several management changes. Vinod Kannan, the CEO of Vistara, who is also handling the role of Chief Integration Officer for the merger of the two airlines, will keep that position after the merger. He will be part of the Management Committee and will report directly to Air India CEO Campbell Wilson.

Resentment is already simmering among a section of Air India pilots over the retirement age of Vistara pilots, and they are looking for parity. At Air India, which was acquired by Tata in 2022 from the government, the retirement age for pilots and other staff is 58 years, whereas in Vistara it is 60 years.

“It is not going to be easy. The management has taken a wise call continuing to fly Vistara under the same logo and with code sharing. It will be a gradual transition and real merger will come to play either Air India come to standard of Vistara or in worst case, Vistara falls to Air India level,” adds Singh.

Vistara aircraft will be operated by Air India and will be identified by a special four-digit Air India code beginning with the digit “2”, said the airline. For instance, UK 955 will become AI 2955, helping customers identify them while booking on Air India website after November 12.

The routes and schedule operated by Vistara will continue to be the same, alongside the Vistara in-flight experience that includes product and services. It will also be serviced by the same crew.

Aviation experts also point at the huge backlog of order globally for in-flight systems, seats, and interiors that could impact the upgradation of Air India fleet. Air India fleet is vintage and has no in-flight systems and upgradation of older fleet is expected to take 4-5 years.