As Vistara Bids Adieu, What Does Air India Gain From The Merger?

Vistara is all set to bid adieu to the skies as the full-service airline company merges with the Tata group's Air India. The airline will fly its last set of flights on Monday. With this, the cumulative number of full-service carriers comes down to just one, in the form of Air India.

In the past 17 years, the total number of FSCs has come down from a total of 5 to a solitary flight service.

Increased Fleet

As this chapter comes to a close, what is in store for the former Indian flag carrier?

Some of the advantages would be an increase in fleet crew that has accrued some positive reputation. This would aid Air India's plans to expand its fleet. Previously, the airline's parent group inked deals with Airbus and Boeing to acquire 470 planes for an estimated USD 70 billion.

Here, a full-service carrier or FSC (sometimes referred to as a legacy airline), is a traditional airline with ancillaries included in the ticket fare. Unlike Low-Cost-Carriers or LCC, where the airline charges you a low fee, without the amenities, and charges you for additional services.

Market Share

Another major factor that could help Air India is the airline's rise in the overall company market share.

Currently, Air India, as per the most recent DGCA data, has 14.7 per cent of the market share of the price-sensitive and developing civil aviation market of India. Vistara before the merger had a total market share of 10.1 per cent.

In addition, Air India Connect also had a market share of 4.3 per cent. Both of these airlines will now be merged into Air India. The market is currently led and dominated by IndiGo.

With the merger of the aforementioned airlines, the total market share is estimated to jump to 29.1 per cent. This is still not even half of IndiGo's market share.

Foreign Routes

In addition, Air India also gains Vistara's coveted international routes. Currently, the airline has services to London, Paris and Frankfurt in Europe.

It also has services in the consequential Gulf destinations, including Daman, Jeddah, Doha, Abu Dhabi and Dubai. It also does services to eastern Asian destinations, including Hong Kong, Singapore, Bangkok, and Bali.

It remains to be seen how far this will allow Air India to maximise its prospects in the time to come as the aviation industry turns into an oligopolistic realm.