Air India gears up to integrate networks. Greater capacity, more flights, higher frequency on cards

Mergers have never really been a success in Indian skies and have more often than not created confusion in the minds of travellers.

Kingfisher Airlines, which acquired Air Deccan, wanted to operate the Air Deccan network as a separate entity. The former Air Deccan routes had different flight numbers and continued operating with Air Deccan aircraft, which were without the frills of Kingfisher Airlines, like personal screens for inflight entertainment. However, this was shortlived.

Jet Airways, which acquired Air Sahara, branded it as Jetlite and later operated it as JetKonnect, also took a mix and match approach. In some cases, the same aircraft would service a sector as full-service and return as a low-cost flight.

Both Kingfisher Airlines and Jet Airways started by having sector-specific service offerings but ended up confusing passengers and sometimes confusing themselves.

What are the options before Air India?

The Tatas have been playing the ‘House of brands’ strategy in the hospitality business, Taj Hotels, for many years. However, that needed a lot of work and continues to evolve. How will it play out in aviation?

In the first phase at least, there are stations and there are routes that have been transferred. As more integrations take place there could be a common ground services team handling any airline. In such a scenario, the cost angle remains the same in most cases but the revenue could change for a low-cost carrier.

Will the group decide to go station specific, where certain stations will see only low-cost services while a few others will see only full service? Or will it be sector-specific, where metro routes will see full-service, while non-metros will see low-cost? Or will it explore the third option of having a mix of both and trying to squeeze the competition with lower pricing with LCCs while pushing yields up for the FSC offering?

Each model comes with its own challenges. Each strategy comes with a counter-argument as well. For instance, in a market dominated by LCCs, do you enter with an LCC offering to take them on or have full-service flights because everything else is LCC? The answers are not easy and could shift from season to season.

The choice could then move to looking at markets that see strong demand in business class and connecting passengers to international destinations, which can be served by the full-service offering, since there aren't any codeshare or interline arrangements between the group companies, just yet.

The Vistara angle

While the integration has started between AirAsia India and Air India Express, and there is a schedule adjustment being done between Air India and AirAsia India, one bit is still missing: Vistara. A joint venture between the Tatas and Singapore Airlines, the airline continues to operate independently, focusing on expansion as it inducts more and more aircraft from an order placed much earlier.

Vistara has positioned itself as a premium carrier, with three class layouts in most of its planes, and operates in markets that overlap with those of Air India and AirAsia India. With Vistara slated to merge with Air India by March 2024, the real challenge will be to merge all of these operations into one and provide a schedule that is optimum. As of now there are routes that see flights from Air India, Vistara and AirAsia India within 10 minutes of each other. Does this push IndiGo to a corner or is there an opportunity to have a spread out schedule? Air India has 12 months to decide.

Tail note

The Air India group will have an exciting time beginning the second half of 2023. From inducting new planes to completing one merger and moving on to another, refurbishing existing planes to expanding the network — it will be like starting over, except that the operations cannot be disturbed in this case.

The group could optimise some markets but continue servicing the others with both LCCs and FSCs. The metros, for instance, could be just FSC to take on competition from IndiGo in an effective manner by catering to corporates, who like to fly with all the frills.

Lastly, it could look at a model similar to Scoot and Singapore airlines for Air India Express and Air India, where passengers can book a through flight even when it involves two different carriers of the group. When flying the LCC leg of a journey with an LCC + FSC itinerary, passengers could be offered complimentary seats and meals. This model is gaining ground worldwide and is also followed by IndiGo in its codeshare with Turkish Airlines and Qantas. For instance, passengers booked on Turkish Airlines flights operated by IndiGo are offered complimentary seats on the LCC leg and not charged.