Air India?s transformation progresses steadily as the Tata group endeavours to merge four airlines into two entities, initiates a comprehensive product upgrade exercise, and begins driving synergies in various operational aspects. Despite the concerted efforts of the new owners, the project is anticipated to require several more months to reach completion.
According to CEO & MD Campbell Wilson, speaking at the CAPA India Aviation Summit, the product upgrade encompasses 25,000 seats. Although the decision to undertake this upgrade was made in mid-2022, Wilson indicated that the entire process would not conclude until FY26. Additionally, Wilson mentioned the impending merger of Air Vistara with Air India, which is slated to be operationally completed by the end of the calendar year.
The magnitude of the transformation is substantial, as highlighted by Wilson, who cited the modernization of multiple outdated systems as a prime example. He emphasized the need to address various shortcomings within Air India, including outdated reservation systems, widespread use of Gmail for communication among employees, aging aircraft, and outdated componentry. Wilson acknowledged the challenges faced in accelerating the product upgrade, particularly due to ongoing supply chain constraints.
Despite Air India?s efforts towards transformation, competition remains active. IndiGo, India?s largest airline by passenger volume, is aggressively challenging Air India?s position. IndiGo has refined its low-fare strategy to perfection, dominating routes with dense traffic and even those with limited competition or attempts by regional carriers to stimulate the market.
In a significant departure from the traditional low-cost carrier model, IndiGo has announced plans to introduce business class service on domestic metro and business routes. CEO Pieter Elbers, speaking at the CAPA India summit, declared that IndiGo has moved away from the traditional low-cost airline station. This strategic shift includes placing a firm order for 30 Airbus 350-900 wide-body aircraft.
The decision to offer premium cabin services reflects IndiGo?s intent to directly compete with the Air India group, which currently provides premium cabin seats on Air India and Vistara flights. An industry veteran familiar with IndiGo?s operations noted that while the idea of premium cabin services had been under discussion internally for some time, the decision to proceed was influenced by the perceived shortcomings within the Air India group.
