Singapore Airlines’ (SIA) recent confirmation that it is in talks with the Tata Group about merging Vistara – its full-service airline venture in India with Tata Sons – into Air India and taking a stake in the merged entity came as a surprise to nobody. That this was the only logical way forward was widely accepted. But SIA was waiting to set its own post-pandemic house in order.
While the news is welcome and expected from a macro sector-wise lens, it raises a big question for Air India, its management and how it will cope with this latest challenge. This is precisely why very few in the industry envy Campbell Wilson, Air India’s new CEO who took charge of the cockpit in end-July.
The Tata Group took over Air India in end-January 2022. But a recent tweet by an Air India passenger sums up how little appears to have changed. Flying from San Francisco to Delhi, the passenger says he had a ‘wonderful’ flight – a 13-hour delay allowed him to spend more time with family, the food was inedible, so he ate less, the seat next to him was unoccupied and broken, so he could stretch out, and the in-flight entertainment didn’t work, so he slept and rested more. There have been other (continuing) complaints.
So, while Air India claims to have recently upgraded its menu and made a few cosmetic changes, the flying experience remains largely unchanged from its public sector days. This has come as a disappointment to many who expected Tata to make a perceptible change in the flying experience within its first year of takeover. Tata insiders say that this change will begin to happen once its five new leased Boeing 777-200LR aircraft start arriving this December. But across sectors and routes, change may be evident only by mid-2023.
But perhaps more worrying is that aircraft upgrade is only a small part of an uphill task. There are still a host of legacy problems that include Air India’s old set-in-their-ways and mollycoddled employees. A section of the more competent and progressive staff who were looking forward to far-quicker action once the Tatas boarded are particularly disappointed.
So, even as the Maharaja and his subjects are shown their true place, Wilson has the even more unenviable prospect of tackling another ‘marriage’ where compatibility is far from a given. Although Vistara has over time managed to doggedly create a distinction between its product and that of its rivals, and is beginning to command a small premium for its service quality and brand recall, it still has a long way to go on almost all other parameters.
Vistara has not escaped the brewing unhappiness pervading the airline sector ever since the pandemic hit. I have received three anonymous sets of emails in the past few months detailing supposed transgressions and incidents by pilots under stress and alleged poor handling by the management. This thread of discontent runs across airlines. Not everything these emails list is probably true. But as this industry also underlines, there is no smoke without some fire.
But if the people problem afflicts the airline like everyone else, Vistara has its own set of unique problems. These include a pretty confused identity from the word go, a less agile style of functioning, a mishmash culture with senior hires from Singapore, and a model running with higher costs and lower frequencies than rivals resulting in huge losses since inception. It is fair to say that while Tata Sons and SIA have slowly and steadily managed to offer flyers a distinctly superior product, it has not yet translated into a better or distinctly superior business. Not everyone is convinced this can happen at all in India’s existing aviation market and environment, citing the failure of Kingfisher Airlines and Jet Airways to bolster their argument.
So, in short, the tasks before Wilson include setting Air India’s house in order, and removing the red ink on its balance sheet while bringing a smile on the faces of both passengers and employees – and then hitting the repeat button on almost all of the above with Vistara. A valid question, therefore, on everyone’s mind is whether the Tata Group and its CEO can pull off such a coup or whether they have bitten off more than they can chew. Either way, the answer will be worth several billion dollars.
