Will Air India be the next Corus for the Tata Group?

The debacle of the Corus acquisition is sufficiently fresh in public memory for it to be relevant in the Air India annexation. In a difficult universe where corporations are struggling to run a single airline, the Tatas have a commitment to three, competing insanely for the frenetic revenue pie in this challenging industry.

As a romantic at heart, especially with respect to aviation, I do get the emotion behind the Air India homecoming, even though the parents have moved on from being freewheeling pioneers to stable value builders. But equally, romance has limited currency in sustainable business and the group must demonstrate exceptional courage in optimising their operational mix, such that the trio can led to multipliers and not cannibalization. This, it must be said, is easier said than done and is a formidable challenge for the finest management suites, the Indian conglomerate truly stretched in this case.

One of the interesting ways to construct this synergy is to do an asset audit, where we clearly isolate the strengths of each such entity towards building a stranglehold over this perilous business. For Air India, it must clearly be the routes, both in terms or quantity and primetime, as a historical legacy has led to enviable slots across the globe. For Vistara, it is equally plainly the service culture, a proven adherence to excellence marking its short but significant tenure. For Air Asia (to be merged with Air India Express), it may be the low-cost magnetism but that too is rather tenuous, as every airline offers cheap fares and more importantly, the value proposition is overshadowed by the gargantuan Indigo. 

So, from a basic business perspective there is a colossal clash of propositions, or rather values, as complementary virtues seem to be unnecessarily competing without validly collaborating. The world class caring and equipment of Vistara are truly the Air India attributes of yore, as pioneers of gracious Asian hospitality as well as a marquee fleet, way before its time. While the cost-correctness of Air Asia is now a standard legacy career strategy, as the coach sections of the aircraft behave way differently from the premium end, multiple promises coexisting in the same craft, even British Airways being a firm advocate of this stance. Even Vistara, for all its exclusivity, launched a no-frills economy fare, where snacks and beverages come at a price. At the very least there is mammoth strategic confusion in the air and as business models collide, the presence of multiple brands seems to compound the dilemma. 

So, from a customer centricity perspective, rather crucial confessedly, I have a radical thought that can salvage the profitability of the Tatas in aviation. Globally, this industry is benefitting from consolidation in terms of routes, operating expenses and alignment of equipment and employees - a fine example of which is the unofficial handshake like One World or Star Alliance. More vitally, people like us who fly are increasingly seeking a simple value mix for sustenance - on time performance, efficient service, convenient routing, considerate pricing and possibly a decent loyalty programme. At the top end of business and first, the tangible differentiators in terms of pampering have further eroded, and the wealthy travellers are increasingly being wedded to a universal value proposition. Therefore, the need for multiple brands is rather defunct, and an integrated airline service, the mega Air India is the crystal-clear necessity.

So, what will the mega Air India offer to its myriad range of customers? A fleet of perhaps 150-plus aircrafts, merging with Vistara's enviable garage strength for sure, capable of serving the low brow regional to the high-end nonstop America circuits. For ease of operations, if a regional subsidiary was to run the ATR fleet that is absolutely fine, as per the norm globally. However, the single and multiple aisle jets must be integrated suitably, consistently delighting customers with the Vistara quality of service, which thankfully is a recognizable benchmark in the skies of India. While the low-cost operating processes of Air Asia must be integrated in the fundamentals of the daily P&L, as that frankly is what the Tony Fernandes legacy can best bring to the party. What I am suggesting most plainly is an integration of branding, a single mega Air India, which blends the values of the three Tata entities, but appearing as a single customer offering. 

Considering the mammoth debt burden and the vagaries of a tumultuous industry, Air India can go horribly wrong if the Tatas persist with the three-brand equilibrium, or rather chaos. A necessary need to compete will lead to wasteful expenditure, confused customer messaging and a colossal wastage in operating synergies. All of this can be avoided by terminating the Vistara story, however painful it may be, and allowing Air Asia to discover another India partner, which may well be Spicejet. All of this may be traumatic emotionally and organisationally, especially the euthanasia of the lovingly crafted Vistara, but unhappily a necessary reality.

Finally, it is about an integration of the finest cultures and the implementation of a potent business plan, effectively and passionately. Air India, in its pioneering days, was a pioneer of this craft and in its second coming as a Tata member, it must be a sincere follower of significant others. But when operating as a single unified brand, the opportunity to become a global influencer may quickly resurface.

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