Vistara's struggles reflect Tata's missteps in airline mergers

The recent cancellations and operational scale-back have undoubtedly damaged Vistara's reputation. (Image: Reuters)
The recent cancellations and operational scale-back have undoubtedly damaged Vistara's reputation. (Image: Reuters)

Summary

  • Vistara's flight cancellations and pilot discontent shine a light on Tata Sons' uphill battle with airline mergers

On Monday, passengers of Vistara's domestic flights faced considerable inconvenience as the airline cancelled 50 domestic flights, alongside a temporary scale-back of its operations. This development was hardly a surprise; for weeks, passengers had aired grievances on social media about the delays and cancellations plaguing Vistara flights.

What is surprising, though, is that Tata Sons, the conglomerate that owns Air India, Vistara, Air India Express, and Air Asia, appears not to have heeded the lessons of history. The track record of airline mergers globally is notably poor, a fact that the aviation industry is well acquainted with.

Closer home, the 2007 merger of Indian Airlines and Air India should have served as a cautionary tale. The integration was marred by a pilot strike due to clashing work cultures—a sore point that persists among many Air India pilots today. Arvind Jadhav, then managing director of Air India, had testified before a parliamentary committee about the daunting challenges of merging airlines, citing examples from the US where merged airline employees continued to adhere to their original operational philosophies.

The full financial implications of Vistara's recent flight cancellations are still unknown. However, history suggests significant costs; for instance, a nearly two-month strike by Air India pilots in 2012 resulted in losses exceeding 600 crore.

Despite these precedents, Tata Sons pressed ahead with consolidation plans, aiming to reduce its airline holdings from four to two. Campbell Wilson, chief executive of Air India, had admitted that merging Air India and Vistara is fraught with complexities, adding that customer-facing aspects, including branding, won't see changes until at least 2025. Yet, the fallout from these merger plans has already begun to surface in 2024.

At the heart of the discontent within Vistara is the proposed salary structure. Tata Sons management is pushing for pilots to accept reduced flying hours—40 hours per month, down from 70—entailing a significant pay cut of between 80,000 and 140,000 a month. 

Vistara pilots, facing a March deadline to agree to new contracts, have expressed their dissatisfaction. They have contented that their role, akin to managing assets valued from tens to hundreds of millions of dollars, requires extensive training and skill, justifying a compensation model distinct from that of factory workers.

The pilots have also raised concerns about the airline's insufficient scheduling infrastructure and the limited number of cockpit crew members, which places them in a constant loop of being on standby or in the air. This, they highlight, severely impacts their work-life balance, underscoring the need for a more considered approach to their working conditions.

It's worth noting that globally, airlines typically schedule pilots for 70 to 80 hours a month, allowing for a fair balance of work and rest.

The recent cancellations and operational scale-back have undoubtedly damaged Vistara's reputation. 

Going ahead, Tata Sons faces a challenging journey. The conglomerate must address not only the HR concerns stemming from the merger of four distinct airlines but also reconcile their differing work cultures and operational philosophies. Astonishingly, two years after acquiring Air India and its sister airlines, Tata's management seems to have underestimated these critical considerations in their merger strategy.

The path Tata Sons chooses to navigate these complex issues will be closely watched, with the immediate fallout already proving to be a significant inconvenience for passengers.

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