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Opinion | Integrating flights will be Tatas first and biggest hurdle after buying Air India
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  • Opinion | Integrating flights will be Tatas first and biggest hurdle after buying Air India

Opinion | Integrating flights will be Tatas first and biggest hurdle after buying Air India

Ameya Joshi • October 8, 2021, 17:48:10 IST
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With four different airlines in the same family, the Ratan Tata-led company will have to ensure that they don’t eat into each other’s traffic

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Opinion | Integrating flights will be Tatas first and biggest hurdle after buying Air India

Even before the formal announcement of the Tata group bagging Air India with its subsidiary Air India Express, a laundry list of challenges was being written. People, seniority, policies, freebies, IT, engineering, fleet integration — you name it and it’s there. But in this entire madness, if there has to be a method, and tackling schedule overlaps should get the top priority. With several airlines in the same family, the last thing one would want is for them to chip away at the other’s traffic rather than teaming up to eat into the competition’s traffic. Air India Express has primarily been operating international flights. The airline’s domestic flights have been focused on basing it before an international flight. This has meant that the domestic network of Air India Express was more often than not different from Air India’s network and the two never competed. For the Tatas, their two existing airlines worked in isolation for the most part. One, a full-service premium carrier in a tie-up with Singapore Airlines, had thought of expanding at key metro cities, and the other driven by the low-cost philosophy based on Malaysia’s AirAsia model, In the initial days, AirAsia India was more noise than substance and ended up setting up a base at Delhi and launching flights to Mumbai, the two markets the airline wanted to avoid citing high operating costs. The overlap Following the gradual unlock post-pandemic, airlines have launched new destinations, sectors and connected existing destinations with non-stop flights. An exclusive analysis by OAG shows that the four carriers under the Tata umbrella — Air India, Air India Express, Vistara and AirAsia India —operated on 150 domestic routes. Of these, the maximum flights — 121 — are operated by Air India, followed by AirAsia India’s 46, 42 by Vistara and just 13 by Air India Express. There are only three routes where Air India and Air India Express have a joint presence: Delhi-Jaipur, where Air India Express operates once a week while Air India has 11 flights a week; Delhi-Varanasi where Air India Express operates three times a week against Air India’s 18 times a week and Hyderabad-Vijayawada, where both airlines operate three times a week. Except for Delhi-Varanasi, Air India Express does not compete with either AirAsia India or Vistara on any of the domestic routes. The real challenge: full-service carriers The last couple of months have seen the two full-service carriers, Air India and Vistara, reach new highs in market share. While it was largely driven by low-cost carriers reducing their capacity, it is also an indication that people were willing to explore full-service carriers, more so when airfares are capped. Interestingly, Air India has a presence on all but six sectors where Vistara operates. The six routes are Bengaluru-Guwahati, Bengaluru-Chandigarh, Mumbai-Chandigarh, Kolkata-Pune, Delhi-Chandigarh and Bagdogra-Dibrugarh. There are two ways of looking at schedule overlaps. The first is how this effectively helps take on the competition. For example, on routes like Delhi-Amritsar or Delhi- Pune, the combined entity will have a larger presence than not just India’s current market leader IndiGo but equal to the combined frequency of all other airlines. The other way of looking at it is as a challenge. As a sample, these airlines could have back-to-back flights on the same sector. In some sectors like Bengaluru-Delhi, Vistara and AirAsia India already compete with flights within minutes of each other. Add Air India to that and we have a heady mix. Interestingly, some of these routes would not have a lot of ability to manoeuvre. Routes to destinations like, say, Udaipur, Jodhpur or Goa, where the bulk of the traffic is either driven by hotel check-in/check-out times or by the limited operating window or both, will continue to see airlines in lockstep with regard to timings. These are the routes where the combined pricing power could help raise fares and take it to sustainable levels for the airlines, which have been in losses thus far. End note Clearly, the challenges are many. But if there is one place the Tata group has to start from, it is schedule integration and see how the airlines’ combined might can take on IndiGo or at least move in that direction. The benefit of moving from a fragmented industry dominated by one player to a race where there is a second strong airline group could well inculcate discipline in pricing and contribute to a market that also grows and sustains.

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