AirAsia sale is a step towards merger of three Tata airlines

A subsequent statement from Air India suggests that the merger with AirAsia could be completed by the end of 2023. It has started the process of merging AAI into Air India Express (AIE) to form a single low-cost carrier.

With Tata Sons now acquiring the remaining stake of around 13 per cent in AirAsia India, the brand will cease to exist and will be merged with Air India Express.

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It’s not unexpected. AirAsia’s sale of its equity shares is actually the first step in merging different pieces of Aara, something Tata Sons will have to complete to eventually merge the three airlines it currently operates and manages – Vistara, Air India. Express and Air India.

Of course, the merger with AirAsia India has its advantages. Tata may now consider using AAI’s manpower and routes to expand Air India Express’ footprint in the domestic skies. At the moment, Air India Express mainly connects Kerala to the Gulf and there are a few flights to select Indian cities that act more as staging points to connect to cities in the Gulf.

Indian domestic skies are dominated by low-cost carriers (IndiGo has over 50 per cent of the domestic market share) Is. Or the rationalization of the 18 routes on which it operates. The model can be replicated on international routes with AI Express tapping into the Far East and regional markets, which will increase revenue, passenger numbers and aircraft usage for the group.

For this to happen, Tata will have to utilize the period of one year before the merger is completed to overcome the difficulties in integrating AAI and AIE. A burning issue is the training of crew in AIE. This was highlighted in the report of the Aircraft Accident Investigation Bureau on the crash of an AIE plane in Kozhikode in August 2020.

In its report, the bureau pointed to a string of mistakes – pilots ignoring standard operating procedures, airport equipment misreading the weather, poor crew training and mismanagement of staff by Air India Express. ignored. 21 passengers including both the pilots died in the accident.

The next one year can be used by AI’s management to achieve a better aircraft tail-to-personnel ratio (a key parameter in measuring the successful operation of an airline), both by sacking additional staff at airlines and key pilots such as To retain personnel. ,

The issue of integrating the two different types of aircraft – AAI operates an Airbus 320 while AIE operates a Boeing 737 – will also have to be tackled. However, this is a minor problem, and can be quickly resolved through pilot conversion training which takes a few days. But the bigger challenges that will be more difficult to tackle include integrating all the paperwork under a single platform.

However, this is only part of the story. The second important part is to persuade Tata Sons to get Singapore Airlines to join AI at the earliest.

Last month, in a statement to the Singapore Stock Exchange, Singapore Airlines made public that it is in talks with the Tata Group on the possibility of merging the two airlines.

SIA, considered one of the world’s most successful airlines, can help Tata Sons turn AI into what JRD Tata hopes and what Tata Sons and Wilson Campbell are trying to achieve – a truly global An airline that is not the preferred carrier of passengers. not only from the Indian diaspora but also from the global business community, as Mint Snap View Has argued in the past (Tata might do well by joining Singapore Airlines to jointly run Air India Mint (livemint.com).

No one can doubt the Tata Group’s ability to successfully run a diverse range of businesses, from salt making to cars to running hotels. However, running an airline with an ambition to rule the international skies is a different ball game and this is where the managerial expertise that SIA has honed over the years is critical to taking AI to the height it should soar .

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