Enhancing The Flying Experience : The Mega Air India – Vistara Merger

On November 11, 2024, Vistara airlines will officially merge into Air India, thereby drawing curtains on flights carrying the “AI” flight code instead of its “UK” designator and flight bookings too moving to the latter’s web portal, completing the official merger between the two airlines. The merger was announced by Vistara and Air India soon after Singapore International Airlines shared the news that the Indian government has approved its proposed foreign direct investment (FDI) into Air India. Singapore Airlines, which held a 49% stake in 70-aircraft strong Vistara along with Tata Sons, will now hold a 25.1% stake in the combined entity with a total fleet size of 285 aircraft in return for a ₹2,058.5 crore investment. The combined entity includes Air India, Air India Express and Vistara.

All the passengers already booked on Vistara flights after November 12 will automatically have their reservations converted to Air India flight numbers. The process has already started in phases since September.

Sharing his views on the merger N Chandrasekaran, Chairman, Tata Sons said, “The merger of Vistara and Air India is an important milestone in our journey to make Air India a truly world-class airline. We are transforming Air India, with the aim of providing great customer experience, every time, for every customer. As part of the transformation, Air India is focusing on growing both its network and fleet, revamping its customer proposition, enhancing safety, reliability, and on-time performance. We are excited with the opportunity of creating a strong Air India which would offer both full-service and low-cost service across domestic and international routes. We would like to thank Singapore Airlines for their continued partnership.”

Further Vinod Kannan, CEO, Vistara Airlines added, “We want to emphasize that this merger is about offering customers more choice with a larger fleet and a wider network, while elevating the overall travel experience. Vistara and Air India are committed to ensuring that this transition is smooth and hassle-free,” said Vinod Kannan, CEO, Vistara Airlines in a press statement.

Goh Choon Phong, Chief Executive Officer, Singapore Airlines, said: “Tata Sons is one of the most established and respected names in India. Our collaboration to set up Vistara in 2013 resulted in a market-leading full-service carrier, which has won many global accolades in a short time. With this merger, we have an opportunity to deepen our relationship with Tata and participate directly in an exciting new growth phase in India’s aviation market. We will work together to support Air India’s transformation program, unlock its significant potential, and restore it to its position as a leading airline on the global stage.”

By merging Vistara, Tata aims to enhance network planning and optimize their long-haul operations, particularly on competitive routes like Delhi to London. Vistara’s loyalty program, Club Vistara, will merge with Air India’s Flying Returns, offering seamless transitions for customers. However, concerns remain about the loss of some of Vistara’s exclusive airline partnerships and non-airline collaborations.
The bigger challenge for Air India, however, lies in its competition with the Middle Eastern giants such as Emirates, Etihad, and Qatar Airways, which dominate Indian international routes. While Air India is introducing new aircraft and upgrading services, its reach and network are still limited compared to these carriers. Meanwhile, Indigo, India’s largest low-cost airline, is expanding its international footprint, further intensifying the competitive landscape.

As Air India looks to the future, the merger is seen as a strategic move to improve efficiency and strengthen its global positioning. But the airline has a long road ahead, with its biggest challenge being whether it can transform fast enough to compete with other international and domestic airlines when various recent incidents have marred the reputation of Air India badly.