After integrating its full-service carriers Air India and Vistara and low-cost carriers Air India Express and AirAsia India under its ambitious Vihaan.AI transformation programme, the Air India group will exclusively be operating with two airline brands, Air India and Air India Express. The step is essential to ensure full-service and low-cost services of the two low-cost airlines for the highly synergised operations of the entire group, Air India officials told Business Today.
“We have got two concurrent integrations. One between the two low-cost airlines, Air India Express and AirAsia India), and the other between the two full-service airlines – Air India and Vistara. We will end up with one full-service and one low-cost airline group,” an Air India official told Business Today.
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The carrier is looking at serving a significant part of the domestic market with the low-cost Air India Express. The airline is going to provide onward connections on domestic routes to international passengers arriving by the full-service Air India. Similarly, Air India Express passengers taking an overseas flight will be offered connections on Air India’s routes.
“Ultimately we want the group to operate as one network, distribution and sales platform so that we can provide the rest in terms of the best cost structure and the product for the relevant markets that will take advantage of the economies of scale and breadth and the reach of the group as a whole,” informed officials.
For smooth integration
In the past, India has had a chequered history with airline mergers. The 2007 integration of Air India and Indian Airlines and the now-defunct Kingfisher Airlines and Deccan Air threw up enormous challenges. Air India officials, however, claimed that in their case, the complementarities of the four group airlines would help in ensuring a smooth integration.
“Air India Express and AirAsia India are very complementary. The former has an international footprint and the latter has a domestic footprint. Bringing the two together brings scale and network opportunities. And given the more modern platform of AirAsia India it allows us to support the future LCC’s growth,” said officials.
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The same also holds in the case of Air India and Vistara, they averred.
“Air India was on relatively old IT systems. They have been progressively modernised to be similar to what Vistara has. Again, there is integration, where their domestic strength and domestic product can uplift Air India and vice versa,” said officials.
Since January 2022 when the Tata Group acquired Air India, the airline has registered a 27 per cent increase in the number of operating aircraft, has added new destinations to its route network, achieved a dramatic reduction in call centre handling time, processed a significant number of outstanding refunds, undertaken large scale recruitments and inked lease agreements for 36 new aircraft.
On February 14, 2023, Air India formally announced an order for 470 narrow and widebody Airbus and Boeing aircraft, the largest ever by an airline globally. The size of the deal would expand considerably if the carrier decides to exercise the option of acquiring another 370 aircraft from the world’s leading plane makers, taking the total size of the order to a whopping 840 aircraft.
