Surprise! Air India is Now a Smaller Airline, a Year After Vistara Merger

Exactly one year after the highly publicized merger with Vistara, Air India's fleet size has unexpectedly decreased, raising eyebrows across the aviation industry. While the merger, finalized on November 12, 2024, was initially projected to significantly expand Air India's operational capacity, recent data reveals a surprising contraction.

The merger between Air India and Vistara, a joint venture between Tata Group and Singapore Airlines (SIA), was intended to create a mega-airline, consolidating the strengths of both carriers. Singapore Airlines now holds a 25.1% stake in the merged entity. The combined entity aimed to solidify its position in both domestic and international markets. The initial projections suggested a combined fleet of over 200 aircraft, serving a significantly expanded network.

Prior to the merger, Vistara contributed a fleet of 70 aircraft, operating approximately 350 flights daily. These included Airbus A320s, A321neos and Boeing 787-9 Dreamliners. Air India, on the other hand, had its own existing fleet, including Boeing 777s and 787s. After the merger, Air India was expected to expand to a fleet of 208 planes, servicing 103 domestic and 71 international routes.

However, the current operational fleet size of Air India has fallen short of these projections. While the exact figures remain a subject of speculation, industry analysts point to several factors contributing to this unexpected outcome. One primary reason is the retirement of older aircraft from both Air India and Vistara fleets. As part of the merger, a rationalization process was initiated to phase out less efficient or older planes, streamlining operations and reducing maintenance costs. Some aircraft were returned to lessors as well.

Another contributing factor is the intense competition in the Indian aviation market. Despite the merger, Air India faces stiff competition from established low-cost carriers like IndiGo, which boasts a substantial fleet size and a dominant market share. The merger aimed to allow Air India to challenge Indigo, but Indigo still has a larger fleet. This competitive pressure may have influenced Air India's strategic decisions regarding fleet management and route optimization.

Furthermore, the integration of Vistara's operations into Air India has presented its own set of challenges. Aligning different operational standards, IT systems, and human resources has proven to be a complex and time-consuming process. Some travelers have reported inconsistencies in service during the transition. This integration phase may have temporarily impacted the airline's ability to fully utilize its combined fleet, leading to adjustments in flight schedules and overall capacity.

Despite the reduction in fleet size, Air India maintains that it is committed to expanding its operations and enhancing its service quality. The airline is focusing on modernizing its existing fleet, inducting new aircraft, and upgrading cabin interiors. Air India is also working on expanding its network through codeshare agreements and partnerships, providing passengers with access to a wider range of destinations.

The airline group is undergoing a five-year transformation program called Vihaan.AI, aimed at establishing Air India as a world-class global aviation company. The merger also saw a 25.1% shareholding in the combined entity resting with Singapore Airlines.

The surprising decrease in Air India's fleet size after the Vistara merger underscores the complexities and challenges inherent in large-scale airline integrations. While the merger initially promised significant expansion, the realities of fleet rationalization, competitive pressures, and integration hurdles have resulted in a more nuanced outcome. As Air India continues its transformation journey, it remains to be seen how the airline will navigate these challenges and position itself for long-term success in the dynamic Indian aviation market.