Air India & Vistara May Merge Into One Brand

Air India and Vistara are looking at closer cooperation. It looks like a full-on merger is close to becoming a reality, and that seems logical.

Air India & Vistara plan closer cooperation

The privatization of Air India was announced late in the year. The original owner of Air India, the TATA Group, would be taking control of the company again.

The company owned a majority of the airlines in India. How to manage those different brands has been a big question. We now have a better idea of what that means.

In October, the company announced that it was in discussions with the group about the future of Air India and Vistara. Singapore Airlines said the following.

In line with its multi-hub strategy, SIA is currently in confidential discussions with Tata to explore a potential transaction in relation to the securities of Vistara and Air India Ltd, a subsidiary of Tata. The discussions seek to deepen the existing partnership between SIA and Tata, and may include a potential integration of Vistara and Air India.

There are still discussions going on, and no decisions have been made. A full merger of Air India and Vistara is being planned, with the Air India brand surviving, according to a new report. There could be an official announcement in the near future.

The combined airline would retain Singapore Airlines as a shareholder. It is thought that Air India's stake in the combined airline would be less than 25%.

This would be a very logical development for Indian aviation

Many were excited when it was announced that Air India would be privatized, as the hope was that the things that have been wrong with Air India would be fixed. The customer experience is subpar. The appointment of a new CEO who worked at both Singapore Airlines and Scoot seemed like a smart one.

Air India hasn't had much of a transformation so far, but I'm not the only one who thinks that.

• Yes, Air India is benefiting greatly from Russian airspace being closed to many airlines, as the airline is able to more competitively operate flights to the United States, since it can operate routes that US airlines can’t
• Air India did announce plans to acquire 30 planes, including some former Delta Boeing 777s, which is good news
• However, we haven’t seen a major order for factory fresh wide body jets, and for that matter we haven’t seen any plans to refresh Air India’s awful long haul product, which is woefully uncompetitive

It makes perfect sense that Air India and Vistara should be merged. Even though they have the same owner, the two airlines are competing in many markets. Air India's inflight product is not as good as that ofVistara.

It would make sense for Air India to adopt Vistara's product in order to create a better customer experience. I'm rooting for that to happen, but I'm not sure if it will. I don't think the reality will be that Air India drags Vistara down rather than the other way around.

Bottom line

There is talk of a full merger between Air India andVistara. This is logical given that the two companies have the same majority owner and that Air India is supposed to try to change itself.

The passenger experience of Air India needs to be improved so that the Vistara experience doesn't get worse.

What do you think about Air India and Vistara merging?