"Oh no!” was the exclamation most frequent flyers let out when the Tatas announced Vistara as an airline and brand would disappear on 12 November.
The amalgamation of Vistara into the Tatas’ flagship Air India has been in the works for some time; but it came earlier than expected. Beyond 12 November, Vistara’s aircraft, crew and its operating certificate will be transferred to Air India. Though the livery, staff and in-flight service of this neat airline may be visible till early 2025, ‘Vistara’ as a consumer choice and a ‘UK’ flight number will cease to exist.
Vistara was launched as a Tata Sons-Singapore Airlines joint venture in 2013 to fill the vacuum of a premium, airline after both Kingfisher and Jet Airways were on the way down. The Tatas had not inherited Air India then. Commercial flights started in January 2015. Over time Vistara, with the Singapore Airlines training, matured to a strength of 70 aircraft, and a market share of 10% in the domestic segment and 4.1% for international flights.
Meanwhile, the Tatas acquired Air India from the government inJanuary 2022 for Rs 18,000 crore. The two airlines, despite the common ownership, are as close as chalk and cheese. One has been a long-time ‘sarkari’ airline bringing to the table all the baggage of inefficient services. Despite the Tata takeover in 2022, its image as a poor performer has persisted.
In contrast, Vistara with its new, gleaming fleet of A-320s and high-grade hospitality, emerged as a preferred airline with a loyal following among premium flyers. So, does it make sense for the Tatas to kill a successful brand?
High brand value
For the Tatas, the Vistara merger is part of a larger game plan. It has 4 airlines that logistically are difficult to operate as separate entities. It has thus opted to dovetail these into two brands – a premium, full service airline merging Vistara, and AIX Connect (formerly Air Asia) into the flagship, Air India; and a short-haul, low-cost ‘Air India Express’ which it acquired along with Air India.
“The merger of Vistara and Air India is an important milestone in our journey to make Air India a truly world-class airline. We are transforming Air India, with the aim of providing great customer experience,” said N Chandrasekaran, chairman – Tata Sons.
Reading between the lines, what Chandrasekaran is saying is, apart from logistical advantages, merging Vistara with Air India will help lift Air India’s brand value. But things can move the other way: Air India may sink the high standards established by Vistara forever!Why demolish a brand nurtured over years of hard work?
When Vistara introduced its ‘Premium Economy’ seats in addition to business class, people scoffed at the additional passenger grade. Over time though it was a successful experiment. It was a sleight of hand. The seats were the same, except they came with a glass of juice and a curtained section cut off from the coach-class behind! It was designed to allow snoots to give disparaging looks to their poor country cousins on the back rows. Aspirational value, it is called; and it brought in big bucks for the airline.
Two parallel airlines
Besides these innovations, the high standards of service, and Vistara’s distinct but unconventional ‘aubergine’ colours gave a new connect to the well-heeled. These were a class of flyers who had felt lost after Jet Airways shut down in 2019, and Kingfisher before that.
Maintaining two airlines, two brands from one stable is not a new game. Vistara and Air India can fly together – one for premium flyers, the other reaching a mass of customers with its higher connectivity. The dual strategy could well have flown the Tatas to number one ranking, past Indigo.
What possibly has worried the Tatas is they want Air India to be a premium airline, and Vistara would have cannibalized that customer base. This approach should take a leaf out of Coke’s acquisition of the cola brand, Thums-Up. When Coke launched for the second time in 1993 in India, Thums-Up ruled the market. The acquisition strategy was to buy and kill the competition. But despite trying it’s damnedest, Thums-Up continued to thrive and some customers turned to Pepsi Cola. The strategy was thus reversed and Thums-Up survived and grew as a parallel brand with Coke.
Thus, killing Vistara won’t necessarily push customers to the Air India aisles. Indigo is creating its own business class in anticipation of the bloodbath after Vistara shuts down. Maybe Akasa Air will graduate to what Vistara is today. What’s the guarantee, the Tatas’ strategy of killing Vistara won’t benefit Indigo or Akasa more than Air India?
For consumers, shutting Vistara is one more blow to the poor options Indian flyers have on domestic routes. Go Air and Jet Airways are shut. SpiceJet is sinking fast. Indigo, the largest of the domestic airlines, has grown so fast, it has lost track of the all-important entity – the customer. In the final audit, we will have a duopoly of Air India and Indigo – two equally mediocre offerings.