What will the restructured Tata airlines look like?

The Tata Group’s airlines operate both Airbus and Boeing aircraft in the narrowbody segment, while the widebody segment has only Boeing aircraft. (Representative Image)

It seemed very obvious but was always talked about in hush-hush tones and now it’s being more widely discussed. The Tata Group plans to merge its carriers under Air India and retire the Vistara brand, with Singapore Airlines onboard as an equity holder.

The restructured entity will have Air India as the full-service arm and Air India Express as its no-frills arm, much like how Singapore Airlines has Singapore Airlines and Scoot, having retired the regional arm SilkAir by merging it with Singapore Airlines.

When the Tata Group took over Air India in late January this year, it was just ahead of the summer schedule. With a new team in place, the airline made significant changes to the schedule in August. These changes on the domestic front are yielding results with more passengers flying the airline.
As the merger proceeds, there will be three things which will be keenly observed: the fleet, the people and the routes.

The fleet

The group’s airlines operate both Airbus and Boeing aircraft in the narrowbody segment, while the widebody segment has only Boeing aircraft.
The narrowbody segment comprises 68 A320 family aircraft of Air India, 46 of Vistara and 28 of AirAsia India. The Boeing narrowbody segment includes 24 of Air India Express and five of Vistara.

On the widebody side, there are 43 aircraft of Air India and three of Vistara. A grand total of 217 aircraft, even though not all of them are operational for one reason or another.

Additionally, Air India is inducting 25 narrowbody and five widebody aircraft. This takes the number very close to that of IndiGo in fleet size and Air India as a group could well exceed the 30 percent target that it has set for itself if it manages to get all its aircraft flying.

Routes

OAG Aviation’s schedule listing for the current week shows 910 routes operational in India across all airlines. IndiGo operates the maximum with 765 routes. Air India operates 169, Vistara 99, AirAsia India 88 and Air India Express, which is primarily an international carrier, 11. Together, the Tata Group operates 250 city pairs in the country.

Interestingly, the Tata Group flies more frequently than rival and market leader IndiGo on the top three routes in the country: Delhi-Mumbai-Delhi, Delhi-Bengaluru-Delhi and Mumbai-Bengaluru-Mumbai. Among the top 10 routes, the Tata Group trumps IndiGo on sectors including Delhi-Pune-Delhi, Delhi-Ahmedabad-Delhi, Delhi-Srinagar-Delhi and Mumbai-Chennai-Mumbai.

Capacity gives pricing power to an airline and when schedules are integrated, it gives the passengers wider choice, which could well be bad news for IndiGo. While there is no match to the airline’s expanse of 75 destinations in India, on key routes it has started to see competition like never before.

IndiGo reached market leadership in August 2012. Since then, developments such as the collapse of Kingfisher, investments by Etihad into Jet Airways leading to focus shifting to international routes, and the near-death experience of SpiceJet in 2014 ensured that there was a dream run for IndiGo.

When the markets stabilised a bit, IndiGo went into an induction spree like never before, doubling its fleet to 200 in three years, after taking 10 years to reach the first hundred.

On the international side, while Vistara’s routes to London, Frankfurt and Paris have an overlap with Air India, routes to the Gulf could be the money spinner.

FSC or LCC?

Air India will have to deal with the confusion that Jet Airways and Kingfisher Airlines couldn’t handle: deciding routes for full-service carriers and low-cost carriers. Will both be present on all routes? Will there be a cross-selling of inventory? Will the LCC be just a class of service?

Jet Airways experimented with the LCC model, calling it Konnect. The segregation went around by route, at times by the time of the flight, and that ended up with a full service flight on the way to a destination and a no-frills service on the way back. Kingfisher Airlines tried the same. Eventually, both shifted to all flights being full service.

The challenges are also on the people’s side. The Indian Airlines-Air India merger has not been smooth and we are now looking at Vistara merging into Air India and AirAsia India into Air India Express. The only solace could be that even though there could be duplication of jobs, the expansion would mean there aren’t any job losses.

Tail note

The much-anticipated aircraft order has not been placed yet. That could happen any moment. Until then, could there be another announcement of leased aircraft to tide over the shortage in the interim? Global supply chain issues have led to aircraft, engines and seats – just about everything – being out of sync with each other.