Air India’s Carrier Merger With Vistara

Major cities will see tremendous growth for Air India thanks to the domestic market. Without taking into account Air India Express, it would continue to rank second globally.

As you are already aware, Air India and Vistara will merge, with a completion date of March 2024, pending regulatory permission. It seems that the name Air India would be kept. It happens at a time when Air India is expanding, propelled by a large number of leased aircraft and the restarting of old equipment. The Star Alliance airline is eager to advance under Air India’s transformation strategy, new ownership, and new CEO.

If Vistara truly has absorbed the lessons from Indian Airlines, it will do this much more quickly, making it the nation’s second-largest airline behind IndiGo. The “new” Air India will be considerably more prevalent in big cities and double its capacity in Delhi, where it has its primary base. And that’s even before the merger of AirAsia India and Air India Express into the Air India Group is taken into account.

Air India and Vistara

India has 86.3 million nonstop departure seats on domestic and international flights operated by Indian and foreign carriers during the Northern Hemisphere winter season (October 30–March 25). That is based on the most recent statistics from OAG, which is presented below along with the top 10 airlines in India.

Air India has 8.2 million of the 86.3 million, while Vistara has 6.3 million, for a combined total of 14.5 million. By working together, they might gain a 16.8% market share and solidify their position as India’s second-largest operator. They would be three times bigger than Go First, who are currently fourth, but three times smaller than IndiGo.

When AirAsia India and Air India Express are added, the Group would have a quarter of the country’s capacity. IndiGo and the Air India Group would have over seven in ten India seats, really concentrating India’s seats.

Internal growth

India’s fast-growing domestic market has 70.1 million departing seats this winter. Air India and Vistara’s combined share would be 17%, far smaller than IndiGo’s 56%. According to OAG, Air India has domestic flights to 49 Indian airports, against 31 for Vistara. Only Dehra Dun and Ranchi will be added to Air India’s network, if they’re kept.

A different picture emerges when looking at major metro-level routes, which Air India has stated is its key priority going forward. Examining routes between the cities of Delhi, Mumbai, Bengaluru, Hyderabad, Chennai, and Kolkata (e.g., the five cities from Delhi, the five from Mumbai, etc.), Air India’s capacity share between those cities would grow by 140%: from 2.0 million to 4.8 million.

Vistara would particularly help Air India to expand its metro route presence at Mumbai, depending on how exactly Air India would use the slots it obtained – would it boost key domestic routes further or use slots for other operations, such as more international? Indeed, more broadly, Vistara would be a crucial way for Air India to add more capacity in very congested Delhi and Mumbai in particular.

Air India To Be #2

The best international airline from India is still IndiGo. It owns 15% of the market and 2.3 million international departure tickets this winter (Indian and foreign carriers). Air India itself (excluding Air India Express) comes in second with 1.8 million and 11%. Only 416,000 (2.6%) people work for Vistara internationally.

The “enlarged” Air India would have 2.2 million (14%) more subscribers than Vistara and still come in second. International will undoubtedly continue to be a top priority in the future, even though IndiGo will undoubtedly significantly increase its international operations between now and March 2024. We are unsure of what Air India/Vistara may have to give up in order for the deal to be approved by the authorities.

Importantly, the Air India Group would maintain its top spot as a worldwide conglomerate if Air India Express were included.

The network of Air India includes every international airport that Vistara flies into. Of course, expanding at important airports with limited slots, like London Heathrow, will benefit Air India to some extent.