“The genesis of Vistara goes back to years of 1932 and 1947, when Tata Airlines and Malayan Airways each respectively entered the aviation space… their journeys have converged, leading to the formation of Vistara,” the cover page article of Vistara’s first inflight magazine published in January 2015 announced. The magazine cover had two flaps — one had JRD Tata’s image and the other had a Singapore Airlines’ cabin crew member on it, which opened to the picture of a gleaming new Vistara aircraft.
In 2015, Vistara was not just seen as an airline venture for the Tata Group! It was an attempt by the diversified Tata Group to create a product, in partnership with Singapore International Airlines, that carried forward the legacy of J R D Tata. Vistara, the name that came from a Sanskrit word Vistaar meaning limitless expanse, was living up to its name and rapidly expanding till the Tata Group won the bid to pick the Indian government’s 100% stake in Air India last year. The promoters had put in about Rs 9,400 crore in Vistara till date. The government, after more than one deadline extension and in its second disinvestment attempt, was successfully able to sell the state-owned airline to the Tata Group, which paid Rs 18,000 crore, including Rs 2,700 crore as cash payment, to the government. The airline was formally transferred to the group in January this year.
For the Tata Group, this acquisition was projected as a homecoming of sorts and Air India was then chosen as the member that will carry forward the JRD legacy — JRD was the founder of Tata Airlines that was later renamed Air India and he flew the first Tata Airlines flight between Karachi and Mumbai via Ahmedabad in October 1932. From there on, it was clear that Vistara’s days may be numbered, as a merger with Air India was seen as a ‘foregone conclusion’.
With the November 30 announcement of SIA getting 25.1 per cent in Air India, the combined group will embark on a journey that would eventually lead to four airlines shrinking to two – Air India and Vistara as Air India and Air India Express and AirAsia India as a low-fare carrier. The two main challenges are likely to be human resource synergies and network integration.
During the due diligence process of AI, it became clear to the people at the Tata Group that the airline has a lot of staff that are not required for operational purposes. There were far too many people stationed at airports and in departments for coordination purposes. A lot of processes with respect to aircraft spares were not computerised, thus, requiring a lot of people. To be fair to Air India, the airline company did require coordination with the government on every major decision since it was owned by them.
It is learnt that the current CEO & MD Campbell Wilson had expressed disappointment with the quality of workforce in Air India and expects Vistara’s workforce to set a benchmark and help improve the situation. “The skills, people, systems and processes that have driven Vistara’s success will complement, strengthen and accelerate Air India’s Vihaan.AI transformation programme, and enable the new Air India to more quickly attain the size, reach and quality befitting of a world class airline proudly representing India around the globe,” Wilson was quoted in a statement issued by Air India on Thursday.
Vihaan.AI is a five-year plan of the Tata Group that aims at increasing domestic market share to 30 per cent and considerably increasing international market share. A similar sentiment was echoed by Vistara CEO Vinod Kannan in his email to its employees. A senior executive, in the know, explained that the merger of Air India and Vistara will become much more clear in a year’s time, when the airline lays off people through retirements and Voluntary Retirement Scheme (VRS).
Through retirements, Air India was to see 5,000 of the over 9,000 permanent employees go by 2027 — this has been advanced by the airline seeing about 3,000 people opt for VRS. “Barring pilots, crew and engineering staff, the airline may see people go,” said an executive on a condition of anonymity. To put things in perspective, Vistara has about 4,700 employees. Any integration of two culturally dissimilar organisations is fraught with hurdles, just like the earlier Air India-Indian Airlines merger. Only time will tell whether this strategy could bring back glory days for Air India, but one thing looks certain — Vistara’s short legacy could help give wings to Air India’s flight for not just its revival, but also for rekindling the brand to its former glory.
Going ahead, the aviation industry in India and across the globe would keenly track the flight path of the Air India and Vistara combine — with a lot riding on this turnaround strategy for not just the Tata Group, but for Indian aviation too.