In 1953, government snatched Air India from TATA and soon after, the airline lost its monopoly
69 years later, TATA has reclaimed Air India
And now it's merging Vistara with Air India to reclaim the throne
Here's how the "Maharaja" is planning a comeback:
69 years later, TATA has reclaimed Air India
And now it's merging Vistara with Air India to reclaim the throne
Here's how the "Maharaja" is planning a comeback:
JRD Tata became the pioneer of the civil aviation industry of India when he undertook India's first air service flight in 1932.
Since then, Tatas are capitalizing on all possible opportunities to spread their wings and fly around the globe.
Since then, Tatas are capitalizing on all possible opportunities to spread their wings and fly around the globe.
The Indian aviation industry is an oligopoly market with 9 players
β which makes it hypercompetitive.
IndiGo is leading the industry and now TATA Group is taking all the strategic decisions to replace it and claim the title. But exactly how are they planning to do it?
β which makes it hypercompetitive.
IndiGo is leading the industry and now TATA Group is taking all the strategic decisions to replace it and claim the title. But exactly how are they planning to do it?
Tata Group devised an ambitious expansion plan years ago and they've been unfolding it since then.
In its first stage, Tata Group established 2 Joint Ventures(JV) in 2013 when the Indian govt allowed an FDI of 49% stake in airlines.
In its first stage, Tata Group established 2 Joint Ventures(JV) in 2013 when the Indian govt allowed an FDI of 49% stake in airlines.
1. The first JV was b/w Tata Sons and AirAsia to commence the operations of AirAsia India for low-cost air travel.
Later Tata Sons bought all the stakes from AirAsia.
2. The second JV was b/w Tata Sons and Singapore Airlines to launch Vistara as a premium full-service carrier.
Later Tata Sons bought all the stakes from AirAsia.
2. The second JV was b/w Tata Sons and Singapore Airlines to launch Vistara as a premium full-service carrier.
And finally, in Jan 2022, Tata Group successfully got Air India Ltd back from the govt.
β including its low-cost unit- Air India express.
In this way, Tata Group has been managing 4 airline co.s- with distinct profiles- all competing for their market share.
β including its low-cost unit- Air India express.
In this way, Tata Group has been managing 4 airline co.s- with distinct profiles- all competing for their market share.
Each co. has a different
β’ brand,
β’ work ethos,
β’ models of aircraft,
β’ setups of engineering, logistics, inventory, operations, marketing, and finance,
and several CEOs & boards.
Nothing else could be more complex or costlier than this.
β’ brand,
β’ work ethos,
β’ models of aircraft,
β’ setups of engineering, logistics, inventory, operations, marketing, and finance,
and several CEOs & boards.
Nothing else could be more complex or costlier than this.
But now with the new deal, Tata Group is Horizontally Integrating the 2 giants.
Horizontal integration is the amalgamation of 2 co.s operating on the same level in the same industry.
Singapore Airlines is investing $250M for 25.1% stakes in the enlarged Air India Group.
Horizontal integration is the amalgamation of 2 co.s operating on the same level in the same industry.
Singapore Airlines is investing $250M for 25.1% stakes in the enlarged Air India Group.
This merger between the 2 airlines is an exceptional strategy and comes with several advantages.
βοΈ Larger market share and increased customer base
After this merger, Air India will gain all the loyal customers of Vistara who wants to get the premium service.
βοΈ Larger market share and increased customer base
After this merger, Air India will gain all the loyal customers of Vistara who wants to get the premium service.
Now see, the Indian domestic market is known to be price-sensitive. People put cost over anything else and show less or no brand loyalty.
And that's why the low-cost carriers captured the largest chunk of the market.
But there was still a problem.
And that's why the low-cost carriers captured the largest chunk of the market.
But there was still a problem.
Because the low-cost airlines did not charge much, they couldn't keep their customers happy.
And that's why dissatisfied-high-revenue travelers started looking for a new substitute.
And finally, Vistara gave them an option.
And that's why dissatisfied-high-revenue travelers started looking for a new substitute.
And finally, Vistara gave them an option.
It identified this gap and finally won people's hearts and thrived with a full-service luxury experience.
It gained ground(oh, we mean sky) by providing better customer service.
And as general household income increased in India, willingness to pay a premium price also went up.
It gained ground(oh, we mean sky) by providing better customer service.
And as general household income increased in India, willingness to pay a premium price also went up.
When people started traveling in Vistara, they started complaining about other airlines
β’ bad customer service,
β’ less leg space,
β’ uncomfortable seats &
β’ no complimentary meals.
And that's how Vistara became the first airline co. to build brand loyalty in the air space.
β’ bad customer service,
β’ less leg space,
β’ uncomfortable seats &
β’ no complimentary meals.
And that's how Vistara became the first airline co. to build brand loyalty in the air space.
Now, this brand loyalty will be passed to Air India and so does their customers.
Moreover, Singapore Airlines- which lacks a huge domestic market- will get a strong foothold in one of the world's fastest-growing aviation industries.
Moreover, Singapore Airlines- which lacks a huge domestic market- will get a strong foothold in one of the world's fastest-growing aviation industries.
βοΈ Product Excellence
Vistara is known to deliver the best services in the market. So with its excellent management team and their work ethos on board
β Air India will be able to deliver a better product as compared to the industry standards.
Vistara is known to deliver the best services in the market. So with its excellent management team and their work ethos on board
β Air India will be able to deliver a better product as compared to the industry standards.
The co. is planning on working on safety enhancement, reliability, and on-time performance.
βοΈ Joint Pockets
Both the co.s are willing to inject the required funds to grow their operations in the upcoming years.
βοΈ Joint Pockets
Both the co.s are willing to inject the required funds to grow their operations in the upcoming years.
They're working towards Air India's transformation program to unlock its true & significant potential.
βοΈ Growing Network and Fleet
Air India had 124 planes in 2021. But now with the merger, 54 aircraft owned and operated by Vistara, will be added to the fleet.
βοΈ Growing Network and Fleet
Air India had 124 planes in 2021. But now with the merger, 54 aircraft owned and operated by Vistara, will be added to the fleet.
This brings Air India to operate 178 aircraft
β between more than 50- domestic and more than 30- international destinations.
It will increase Air India's overall operability and network.
β between more than 50- domestic and more than 30- international destinations.
It will increase Air India's overall operability and network.
Moreover, the co. is planning to lease 30 more Boeing and Airbus planes
β expanding its fleet by more than 25% in the near term.
βοΈ Increased Synergies
This integration of the two giants will increase Cost as well as revenue synergy.
β expanding its fleet by more than 25% in the near term.
βοΈ Increased Synergies
This integration of the two giants will increase Cost as well as revenue synergy.
It'll help to enhance Air India's- distribution system, market channels, R&D developments as well as IT.
With this deal in place, now Air India is going to be the only Indian airline to provide both
β’ full-service &
β’ low-cost passenger services.
With this deal in place, now Air India is going to be the only Indian airline to provide both
β’ full-service &
β’ low-cost passenger services.
This merger between Vistara and Air India will help the co. to capture a much larger market share & command a relatively higher price.
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