TATA-Air India, New Era of Total Change

Aviation enthusiastic investors and analysts sees TATA-Air India as a beginning of major ‘changes’ in Indian Aviation business.

As a member of airline fraternity, may I take little freedom in ‘Predicting’ the happenings in the coming in near future?

There will be a total consolidation is going to happen among Indian carriers. Under Tata sons’ itself there are 3 airlines, Vistara, Air Asia and Air India (including Air India express). This will trim between Vistara and Air India ( may be renamed as TATA Air India) who operates a high end Legacy Carrier in both domestic and international by enjoying the international traffic rights/slots which AI is having.

There will be some correction is going to build up between Air Asia and Air India Express as both are on Low-Cost model. TATA’s may feel little heat in dealing this consolidation with Air Asia chief Tony Fernandes as he is still holding 16.33% in Air Asia India. TATAs may continue this under Air Asia brand with some management agreement with Tony’s team, may be an ‘Air Asia Express’.

Now we left with other 3 carriers, Indigo, SpiceJet and Go Air. Indigo will continue as ‘untouchable giant’ for some more time, there will be some correction is going to happen in next few years’ time, may be a stake sale or business model change.

Regarding SpiceJet, their cargo business will grow and the passenger business will auto correct as the losses which they carry forward on their books are huge. They do very good in marketing, but the product is deteriorating. There is a high chance to separate Cargo business with new investors, subject to regulatory nods as it is already part of a listed entity.

The Next is Go Air ( Go First). Over the past many years, they couldn’t differentiate their product among others rather hearing more negative news about it’s ownership and management abuses. Their C level seats are ‘too hot’ for anyone to sit there for a long. Go Air’s survival will be a big question and the same will continue if they are not doing a ‘complete change’.

The one big bash airline which is coming is Akasa Airlines under Rakesh Junjunwala. The market is very skeptical about it as Junjunwala is a traditional investor looks for short term quick gains. Still we have time to comment about it.

Now we left with several other small players which are mostly on ‘Udan’ ( Regional) operators. As usual we can see a minimum of ?3 to 4 startups every year , with turbo-props and the same amount dies every year too. We need to applaud few among them, very specifically Star Air under Ghodawat Group.

Now you may ask, what about Jet Airways? They are changing the goal post every time, poor employees are on big hope. Unfortunately it’s going to be a big corporate story which may grow in volumes for business students to study.

In a summary, year 2022 is going to be a year of complete change for Indian aviation. More interestingly, it’s all for good! India have no appetite for another airline collapse.