Thursday, September 22, 2022

Vistara denies merger with Air India, says no change in operational plans

Full-service carrier Vistara has denied all speculation of a merger with Air India. The Gurugram-headquartered airline has been in the news lately after reports appeared alluding comments on a proposed merger to the airline’s CEO Vinod Kannan. Speaking to Business Today, an executive with the carrier said, “While the acquisition of Air India by the Tata Group is a positive development and has been one of the biggest events in the [aviation] industry, Vistara’s plans remain unchanged as it continues to focus on its organic growth until told otherwise by the parent organisations.”

Launched in 2013, Vistara is a 51:49 JV (joint venture) between the salt to software conglomerate Tata group and Singapore Airlines. Ever since the acquisition of Air India by Tatas in January this year, the fate of Vistara and Air Asia, where the Tata group has a stake, has been a subject of intense discussion.

“Vistara continues to operate as an independent entity and both the parent companies, the Tata Group and Singapore Airlines, remain invested in its growth and expansion plans,” the executive said by way of further clarification.

Meanwhile, in the short and medium term, industry experts see greater operational synergies emerging among the Tata group carriers. “We could also see greater collaboration between the other group companies, namely Vistara and Air Asia,” said director & practice leader for transport & logistics, CRISIL Infrastructure Advisory, Jagannarayan Padmanabhan.

A merger between the two is not going to be an easy proposition. An industry insider requesting anonymity told BT that it would be a long-drawn-out affair as several hurdles needed to be crossed for that to happen.

“With regards to product, Vistara has developed a credible, high-quality domestic airline, while Air India’s domestic operations have very little going for it. Although a merger makes absolute sense; unfortunately, it also means that eventually, the Vistara brand and Air Operator’s Permit (AOP) will have to be retired,” the person said. “The lead for setting and managing the product and domestic operations should, therefore, be given to Vistara, so that their processes take precedence in setting Air India’s domestic operations right.”  

At the same time, the Air India management would also need to pay considerable attention to the absorption of Vistara staff to make the process as little painful for them as possible, the person added.

22/09/22 Manish Pant/

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