Tuesday, December 06, 2022

What The Air India-Vistara Merger Means For Indian Cities

As you know by now, Air India and Vistara will merge, subject to the approval of authorities, with March 2024 set for completion. It appears that Air India's name will be retained. It comes as Air India itself is in expansion mode, driven by many leased aircraft and returning existing equipment to service. Indeed, under Air India's transformation plan, new ownership, and new CEO, the Star Alliance carrier is keen to develop.

It will do so even quicker with Vistara – so long as it genuinely has learned the lessons from Indian Airlines – creating the country's second-largest airline after IndiGo. The 'new' Air India will have a much greater presence in major cities, doubling capacity in Delhi, its main hub. And that is even before AirAsia India and Air India Express, joining forces as part of the Air India Group, are considered.

In the Northern Hemisphere winter season (October 30th-March 25th), India has 86.3 million nonstop departing seats, domestic and international, across Indian and foreign carriers. That's according to the latest available data from OAG, with India's top 10 airlines shown below.

Of the 86.3 million, Air India has 8.2 million and Vistara 6.3 million, for a total of 14.5 million. By joining forces, they'd be firmly India's second-largest operator and have a 16.8% share of the whole market. They'd be three times smaller than IndiGo but three times larger than Go First, presently fourth.

When AirAsia India and Air India Express are added, the Group would have a quarter of the country's capacity. IndiGo and the Air India Group would have over seven in ten India seats, really concentrating India's seats.

India's fast-growing domestic market has 70.1 million departing seats this winter. Air India and Vistara's combined share would be 17%, far smaller than IndiGo's 56%. According to OAG, Air India has domestic flights to 49 Indian airports, against 31 for Vistara. Only Dehra Dun and Ranchi will be added to Air India's network, if they're kept.

A different picture emerges when looking at major metro-level routes, which Air India has stated is its key priority going forward. Examining routes between the cities of Delhi, Mumbai, Bengaluru, Hyderabad, Chennai, and Kolkata (e.g., the five cities from Delhi, the five from Mumbai, etc.), Air India's capacity share between those cities would grow by 140%: from 2.0 million to 4.8 million.

Vistara would particularly help Air India to expand its metro route presence at Mumbai, depending on how exactly Air India would use the slots it obtained – would it boost key domestic routes further or use slots for other operations, such as more international? Indeed, more broadly, Vistara would be a crucial way for Air India to add more capacity in very congested Delhi and Mumbai in particular.

06/12/22 James Pearson/Simple Flying

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