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Air India will remain the only full-service carrier in India after the merger. In the last 17 years, five such full-service carriers have shut down operations in the country
The Vistara-Air India merger, announced on November 29, 2022, will result in Singapore Airlines having a 25.1% stake in the enlarged Air India. (PTI/File)
Vistara Airlines, jointly owned by Tata Group and Singapore Airlines, will merge with Air India on Monday as part of the salt-to-steel conglomerate’s consolidation of its aviation business. With this merger, the number of full-service carriers in the Indian skies will come down to just one.
Air India will remain the only full-service carrier in India after the merger. In the last 17 years, five such full-service carriers have shut down operations in the country.
What Is A Full-Service Airline?>/h4>
The line differentiating a full-service and a low-cost carrier is somewhat blurred. For instance, some of the budget airlines also offer business class seats.
Among others, full-service airlines strive to provide more comfort to passengers during travel and the services, including meals, are included in the ticket price. Also, they mostly operate different types of aircraft and broadly, these airlines focus more on overall network profitability.
In the case of low-cost carriers route-specific profitability, ancillary revenues and mostly single type of planes are among the key elements that help in ensuring cost-effective operations.
With rising air traffic and changing travel patterns, many no-frills airlines are dominating the skies worldwide and India’s dominant carrier is IndiGo. Though it launched its business class on certain routes on Thursday, the market leader remains a budget airline and has a long way to go before it can claim to be a full-service carrier.
Vistara-Air India Merger
Singapore Airlines had a 49% stake in Vistara. After the merger with Air India, Singapore Airlines’ stake will come down to 25.1%.
Then prime minister Manmohan Singh had approved foreign direct investment of up to 49% in the Indian airline sector in 2012. This paved the way for foreign airlines to invest in the Indian airline industry. Jet Airways was the first company to reap its benefits as Abu Dhabi’s Etihad Airways bought a 24% stake in the company.
After Jet Airways, foreign investment flowed in many other airline companies. Malaysia’s AirAsia bought a 49% stake in AirAsia India. After this, Singapore Airlines also bought a 49% stake in Vistara.
Following the exit of Kingfisher Airlines and Air Sahara, Vistara started off as a full-service carrier in 2015.
While Kingfisher Airlines shut operations in 2012, Air Sahara was bought by Jet Airways and started operations under the name JetLite. Full-service carrier Jet Airways, that flew for 25 years before getting grounded in April 2019 due to financial turbulence, is set to be liquidated.
