THE merger of Vistara with Air India marks the beginning of consolidation phase in the Indian aviation sector where nearly half a dozen small and big airlines have ceased operations in the past one decade in a market which is price sensitive and excessively regulated.
According to some aviation experts, the merger indicates that the sector is heading towards a duopoly and is very positive for the overall ecosystem. "Indigo and consolidated Air India will account for more than 80% of the market share indicating that Indian aviation is headed towards a duopoly," said Anil R, Research Analyst at Geojit Financial Services. Aviation consultancy firm CAPA India also said that competitive dynamics in India are moving towards a two-pillar system around the Air India Group and IndiGo.
"The two carriers combined are in due course expected to achieve a domestic market share of 75-80% and in the international market they are expected to grow from 37.8% in the second quarter of the current fiscal to over 50%," CAPA stated. Singapore Airlines (SIA) and Tata Sons this Tuesday announced the Air IndiaVistara merger wherein SIA would own a 25.1% stake in the enlarged Air India group. SIA and Tata aim to complete the merger by March 2024. Post this, brand Vistara will cease to exist.
However, not every expert is jubilant that the merger would lift the country’s aviation sector.
‘Vistara a Failure Brand, Merger Was to Save Image’
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