Tata Group’s Airline Merger Plan : Airline Industry and Mergers in India

Tata Group has become one of the biggest players in the Indian Aviation industry with the acquisition of Air India. Since then the company has a huge amount of assets laying around which need to be organised and used in a defined manner. If the assets are compared with Indigo Airlines, then Tata combined with all its aviation companies has more assets than Indigo. The Tata Group is in the news recently due to the merger proposal of Vistara and Singapore Airlines. Well the Aviation Industry has set up a record of turning tables for the companies post mergers. The most successful airlines with mergers are Delta Air Lines which took over Northwest, United’s merger with Continental, American Airlines taking over U.S Airlines.

However the mergers have been one of the key reasons for airlines getting back into their prime zones, India has a history of failures in this segment. The very known examples of the same are mergers of Kingfisher Airlines with Air Deccan, Jet Airways and Air Sahara. Also currently the issues are undergoing with Air India itself regarding its Air India-Indian Airlines Merger Deal. 

Currently the Tata Group is looking to merge Vistara with Air India. Vistara is a joint venture by Tata group and Singapore Airlines. This announcement has come after the proceedings of AirAsia India and Air India Express  are already in place. 

Indian Airline Mergers

The Indian market is a very rough place for the Aviation Industry and if the industry has a merger in place the merger tends to fail most of the time. As per the recent live cases, the Kingfisher Airlines and Air Deccan Deccan merger was a reverse merger. This would allow Kingfisher to have access to Air Deccan’s Air operation Permit to fly internationally. The reason was Kingfisher’s lack of experience that is required to avail the same. However further down the road the collapse of Kingfisher and Vijay Mallaya is in front of us. 

On the other hand Jet Airways and Jetlite Merger was never complete. Till its last date of operation Jetlite had a different Air Operation Permit than Jet Airways. Also the codes for both the company’s flights were different. Hence this being another example of a failed merger in the aviation industry.

Tata Group, Merger and Aviation

As per an overview it can be said that Tata Group has 51% share in Vistara and 100% share in Air India. However there is a company named Talace which was a special company formed to bid on behalf of Tata Sons. Hence Talace holds Air India and Vistara is held by Tata Sons directly (Tata Sons is the main parent company of Tata Group).

So as per the news, the people are very keen to know how the Vistara and Singapore Airlines merger will be orchestrated. Whether Singapore Airlines gets a stake in Talace or Vistara will be purchased by Talace. However the major point to note is the group has a huge asset base and it has to utilise the same in an organised manner.

In the Indian domain only Vistara and Air India are the carriers with wide body aircraft operations. Also their ties internally have been improved by a complex structure of routes connecting them both to the busy airports like New York, Singapore, San Francisco and London.

Air India and Tata Group

The Air India company has been one of the most beneficial companies in the sense that it always had a bilateral relationship in business. In the current times the company is using its ability to buy new planes rapidly. The addition of a new fleet has also been done by Vistara after its biggest rival Jet Airways collapsed. 

However, being one of the major leaders in the aviation industry in India, Tata group has a huge amount of assets across all airports. This gets the company in a great position. Also its services are getting cheaper in comparison to its competitors and this gives the company an upper hand in the entire situation.

It will be a record as the Air India fleet is all set to offer premium services to the economy class as well. In other words, premium economy. The Vistara flights already have such installation into their system. The re-entry of Tata into aviation since the partnership with AirAsia but the Singapore Airlines has been constantly giving tough battles to the same. Also Vistara has been successful to edge out AirAsia from the entire competition.

Problems with the Tata Group’s Air India

The major issue with Air India is its human capital. The company has multiple people operating in the same role. However any simpler changes in the system would not make it a good road for Air India. With Tata’s involvement and their reputation of being employee friendly, the company is in even more trouble with the human capital problem. Also the company needs an alteration in its routes. The reason is most if its routes are overlapping with Vistara which is held by Tata Sons as well in a partnership with SIA.