Vistara's sunset is a sunrise moment for efficiency of Indian aviation industry

(Representative Image)

In November 2022, a filing by Singapore Airlines with the Singapore Stock Exchange confirmed the speculation about Vistara.

Singapore Airlines would invest a little over Rs 2,000 crore for a 25.1 percent stake in Air India. This would mean the merger of Vistara with Air India, to be completed by March 2024, subject to regulatory approvals.

Nonetheless, the social media chatter around the whys and hows of the end of brand Vistara refuses to die. The press interaction of Air India CEO Campbell Wilson, where he said brand Vistara will be put to sleep, has triggered further chatter.

The Tata group, which now owns Air India along with Air India Express and AirAsia India, is no stranger to operating multiple brands. The house of brands strategy has been in use with its hotel arm, Taj Hotels. Has it been successful? It is up for debate. Multiple properties have seen changes in their category, positioning, and name over the last one-and-a-half decade, and the confusion has been telling. The group can ill afford to go the same route with its airline business, which it took from the government as a loss-making entity.

One brand

Air India is known the world over and makes its origins amply clear — the Indian livery resonates with flyers and gets noticed at global airports. Vistara has definitely made its mark in terms of service levels and has good brand value in India, but its reach and scale is still Lilliputian in front of Air India.

So, whether to pump money to build a global brand or merge it with a brand that already has global presence but needs funds to scale is a no-brainer: merge.

Branding is just one — albeit a substantial — part of the story. The larger part is manpower, pricing power, maintenance, and scale. Operationally, it is very expensive to maintain two different teams and grow on the same or similar routes, indeed even compete with each other, especially when the parent is the same.

Besides being expensive, it may also be counterproductive. A combined unit would mean rationalising operations, and expenses, though definitely not at the cost of jobs considering the high growth lined up.

Also, with one major brand, it becomes slightly easier to take on the competition due to the greater brawn of the combined entity.

A bit of Vistara in Air India?

Wilson recently said that there will be a bit of Vistara in Air India. While this is up for interpretation, one wonders if he meant that the premium economy class which VIstara pioneered in India would be continued in Air India. Air India already has premium economy on the leased B777-200 aircraft which it is inducting, and would also have them on the six A350-900s which join the fleet later this year.

Vistara has had two re-configurations to come to the existing LOPA (layout of passenger amenities) with the first pass seeing the reduction in Business and Premium economy class seats and next one seeing an increase in economy class seats by reducing the seat pitch.

Vistara’s last flight?

Mergers can be messy. The Jet Airways-Air Sahara merger did not result in one airline. Jet Airways’ last flight in 2019 was operated on Air Sahara’s erstwhile Air Operating Permit bearing flight number S2 — the IATA code for the airline. With Kingfisher Airlines and Air Deccan, the reverse merger was smooth in terms of being one single airline, but on ground the differences remained, almost till the airline went down.

It is too early to tell when Vistara’s last flight would be, and when the brand along with the operational codes would be retired, but there is reason to believe that it could happen on the last day of the 2023 winter schedule (March 30, 2024). The next day there’ll be just one large Tata airline ready to take domestic market leader IndiGo and its global peers head on.