Even before the Tata Group announced that it won the bid for Air India and its subsidiary Air India Express, the list of challenges associated with the deal was building up. These include challenges related to employees, seniority, policies, IT, engineering and fleet integration.
Having multiple airlines with a business group also puts the rival airlines at risk of harming their own traffic instead of collapsing into the traffic.
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Air India Express mainly operates international flights. Its domestic flights are kept before any international flight. This means that the domestic network of Air India Express is somewhat different from that of Air India and there is no competition between the two airlines.
The two existing airlines of the Tata Group also do not cause traffic loss among themselves. One of these is a full-service premium airline in partnership with Singapore Airlines and the other operates on the low cost model of Malaysia’s AirAsia.
After acquiring Air India, the Tata Group will have four airlines – Air Asia India, Vistara, Air India and Air India Express. They operate flights on 150 domestic routes.
Out of these, maximum flights 121 are from Air India. It is followed by Air Asia India with 46, Vistara 42 and Air India Express only 13.
The market share of two full service airlines Air India and Vistara has increased in the last few months. A major reason for this is the reduction in capacity by the budget airlines. This is also indicating that people were booking more in full service airlines when the airfares were fixed.
Air India has a presence in all sectors except six sectors where Vistara has flights. This can make it difficult for schedules to overlap.
These airlines can have flights on the same sector at regular intervals. In some sectors like Bangalore-Delhi, Vistara and AirAsia India compete with a difference of minutes in the very first. With the arrival of Air India with them, the difficulty will increase and the airlines of a group will have competition among themselves.
However, there are some routes where the pricing power of these airlines can help increase fares. This can improve the financial position of these airlines which have been in loss for many years.
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