Air India’s CEO Campbell Wilson was in the news, giving interviews to various TV channels and print media. While a lot of things are repeated across every publication, there are a few things which stand out – giving analysts the ability to gauge what is happening with the airline.
Two things stood out which were contradictory statements in the past. The first was the merger of Vistara with Air India, not having a date and linked to performance of Air India. When Singapore Airlines announced the decision or merger and filed it with regulatory authorities in Singapore, it clearly had a mention of March 2024. Six months to that deadline, it seems there is a change of heart. The Competition Commission of India has cleared the merger. There are more regulatory approvals needed, but that is part of the process. The real challenge starts with integration and Air India gets to learn more about it during the merger of AirAsia India and Air India Express – which is much smaller than Vistara – Air India and less complex in terms of service with both being Low Cost carriers. While Vistara and Air India are full service carriers, the three class service on domestic routes of Vistara will have to be carefully integrated with Air India’s two class routes.
The other thing I read is about market share. After having a 30% market share target, the CEO has now said that the airline is not chasing market share for the sake of it. This is the first time when I have seen this being said while the group is on the upward trajectory. In the past, Jet Airways and Kingfisher have talked market share when they had it in their favour. It is then that the airline said that market share was extremely important. When they lost the market share, the airlines talked about market share not being important with focus on profitability. When they had neither market share nor profitability, the metric to talk about became the expanse of the network. The 30% domestic market share target of Air India group is easily achievable, ideally much ahead of the five year mark which it has set itself.
Airline priorities are ever changing. You will see an airline chase load factors one quarter, higher margins the another – at a lower load factor as well and something else the next one and as Air India inches closer to its 30% target, there are other metrics to measure and strengthen. The surprise though remains on the Vistara part. If the merger is linked to Air India’s performance, here we have an entity which has superior service than Air India, but has never made profits since inception, which was looking to be absorbed into Air India but now won’t be merged immediately. Is dying a death by a thousand cuts better or a snap death is better?
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