Vistara’s promising run grounded at take-off
Vistara's merger with Air India evokes nostalgia for Jet Airways as loyal passengers express concern over service quality and uncertainty post-merger.
We are at a deja vu moment in India’s aviation history. After Jet Airways ceased operations in April 2019, there was a steady torrent of dismay and sadness from passengers, commanders and staff of the airline as they lamented its demise. For loyal Jet fliers, it took many months to accept that the brand they had grown to love, trust and value would no longer exist.
Although the almost ten-year-old Vistara from the Tata stable (founded in 2013, first flight 2015) never really achieved the status Jet did, it has slowly but steadily managed to build a loyal base of non-cost-conscious passengers in India. Given the same length of time (as Jet), Vistara could have occupied Jet’s coveted slot in Indian hearts at some stage, but events overtook it.
As the merger announcement — a fait accompli — came on August 30 and specified that the bookings on Vistara would cease, many passengers expressed their dismay on social media and WhatsApp as Air India has not yet become their airline of choice. A large number of these fliers don’t want to fly IndiGo either, which has seen its on-time performance nosedive and service standards fall ever since it grew to a certain size. As things stand, a lot of Vistara frequent fliers comprise those who dictate and are in full command of their travel plans: date, time and fare.
The timing of the merger is even more poignant for Vistara employees and management since, recently, for the first time since inception, the airline earned a small profit, albeit in one quarter, which became EBITDA (earnings before interest, taxes, depreciation, and amortisation) positive and achieved a market share of just over 10%. Complaints were low, loads on aircraft high, and it boasted good on-time performance. Vistara had finally arrived on the Indian aviation scene, so to speak.
It hadn’t been an easy arrival by any stretch. In the first phase, the airline managed to get many things wrong: the model, the aircraft configuration, its cost structure and the contracts entered into. Selling premium economy for shorter domestic hauls in the early days proved hard and the airline had to reconfigure its aircraft. Changes in aircraft configuration cost the airline dearly in terms of the consistency of the product. Fliers who flew and liked the premium economy offering were miffed when they flew on another route and found it missing. For many years, routes and frequency remained an issue. Many fliers who preferred Vistara were forced to fly IndiGo and other rivals due to Vistara’s lower frequencies.
Despite bringing in two expats with a wealth of experience from its partner Singapore Airlines (SIA), the airline continued to struggle. The fact that the might of the Tata group in India and the expertise of SIA failed to combine as a runaway success on the runway was a matter of deep disappointment to the sector as a whole.
It was only after the pandemic that things began to change for Vistara. Two or three external factors worked in its favour: the demise of Jet Airways, the collapse of Go and the weakening of rivals such as SpiceJet post pandemic. From 2022, new chief executive officer (CEO) Vinod Kannan, chief commercial officer Deepak Rajawat and the team they built finally began to see some results in their efforts of course correction. In 2022 and 2023, the airline added new aircraft and redelivered less efficient ones. Its international network grew substantially with new destinations, routes and frequencies. It added the A321LR (with 12 lie-flat business seats and 24 premium economy seats) to its fleet. It also doubled down on Mumbai as a secondary hub with increased international and domestic operations. The domestic network in the last two years grew with a few new routes. Vistara consolidated its position, even as some rivals cut capacity to practically half their pre-pandemic levels and others folded up.
But its success has come at a cost. The airline has accumulated significant losses (in excess of ₹9,000 crore), which will now be absorbed into Air India’s already fairly large losses. Of the total losses, people familiar with the matter said that the amounts spent on building the brand would be like a “dead loss”. In general, Vistara’s costs have almost consistently been close to 30% higher than rivals although the fares charged do not reflect this. Moreover, after the pandemic, like all the other airlines, it has struggled with an unhappier employee pool. Complaints and allegations of transgression have risen, often targeted at the top management.
After the merger process began, April 2024 saw a series of protests and a spate of flight cancellations that threw its operations out of gear as the two airlines tried to bring the employment terms on par. Company insiders say that Vistara has its own culture, and ethos and is now a fairly respected brand, all of which this merger threatens to destroy. Many quote the disastrous merger of Air India and Indian Airlines to cite the challenges of mergers in aviation.
But top Air India management and some Vistara executives maintain that a lot of preparatory work for the merger has been done at the back-end and fliers should not be unduly concerned. The Vistara fleet will function the way it does now and it’s not as if the purple and mustard tail will disappear from the skies in a jiffy, they insist.
All assurances aside, uncertainty is the new tagline at the carrier. While almost all the crew, commanders and technical staff of the 6,000-odd strong employee base need not be concerned for its jobs, it still remains unclear what happens to some of the non-technical staff and top management, including its CEO and chief operating officer. Top Air India officials said that they did not see any role for many of the senior management members in Air India as these positions are already filled at the parent.
Uncertainty also plagues the minds of its loyal club members who remain wary of the abilities of the merged entity and what it will offer in terms of service standards, as well as on-time performance as Air India is yet to get a convincing grip on its own operations. The big question, therefore, is which will see the bigger rub-off on the other: Will Air India up its game and operate more like Vistara or will Vistara lower its standard and end up more like Air India?
No matter what the two companies say on record, for a section of the Indian flying public and many of the airline’s existing employees, this much-dreaded moment of departure for brand Vistara has arrived too soon after its arrival. “Flying the new feeling” is poised to take on a new meaning altogether.
Anjuli Bhargava is a senior journalist who writes on governance, infrastructureand the social sector. The views expressed are personal