Air India and Vistara Merger: Impacts on Employees and Operational Strategies
In a strategic move aimed at consolidating its market position and streamlining operations, Air India is set to merge with Vistara, leading to significant changes within the airline industry.
Voluntary Separation Scheme and Workforce Management
Air India is set to launch a Voluntary Separation Scheme (VSS) for around 600 employees whose roles may become redundant due to the merger with Vistara.
This initiative is part of the airline's broader strategy to manage workforce redundancies while maintaining operational efficiency. The VSS aims to offer employees a voluntary exit option, providing benefits and compensation packages to those who choose to leave.
Despite the anticipated redundancies, Air India has assured that all flying crew will remain employed, with the airline projecting significant operational growth post-merger.
Implementation Timeline and Workforce Statistics
A source cited in the report indicated that the VSS might be implemented by mid-July, pending board deliberations.
Currently, Air India employs around 19,000 staff members, both contractual and permanent, while Vistara has a workforce of approximately 6,500.
Alongside the voluntary separation scheme, impacted employees will be offered health and other benefits.
Global Expertise and Legal Merger Process
The development of the VSS follows a comprehensive fitment exercise conducted with the expertise of global consulting firms such as the Boston Consulting Group (BCG) and Deloitte.
Meanwhile, the airline group is expediting the legal merger process, although complete operational integration may require additional time.
Operational and Procedural Harmonisation
In a parallel effort, Air India has successfully harmonised operating procedures and aligned supporting manuals across key functions for the four Tata Group airlines.
On Monday, Air India announced the completion of these harmonisation efforts, which involved a dedicated team of over 100 members working over the past 18 months.
Impact on Flying Crew Jobs
The merger between Air India and Vistara is expected to have several impacts on the flying crew jobs at both airlines:
Job Security and Retention
- Increased Job Security: The merger aims to create a stronger, unified airline capable of significant operational growth. This could lead to more flying opportunities and increased job security for the flying crew.
- Employment Assurance: Reports indicate that all flying crew will remain employed post-merger, suggesting that immediate job losses are not anticipated.
Operational Efficiency
- Streamlined Operations: Harmonising operating procedures and aligning supporting manuals could lead to more efficient operations, reducing redundancies and improving work processes for the flying crew.
- Best Practices Adoption: The merger process includes aligning on the best practices from both airlines, which can enhance operational efficiency and job satisfaction for the crew.
Training and Upskilling
- Enhanced Training Programs: The integration may include comprehensive training programs to up-skill the flying crew, ensuring they are well-prepared for the unified airline’s operational standards.
- Career Development Opportunities: The merger may present new career development and growth opportunities within the expanded airline structure.
Standardisation of Procedures
- Consistent Operational Standards: The merger aims to create consistent operational standards across the new unified airline, which can improve the flying crew's work environment and safety standards.
Potential Challenges
- Initial Transition Period: The transition period may bring about temporary challenges such as adjustments to new procedures, changes in routes, and potential shifts in job roles.
- Uncertainty and Stress: Despite assurances, there may be uncertainty and stress among the flying crew as they adapt to the changes brought about by the merger.
Long-term Growth and Expansion
- Growth Opportunities: With the combined resources and networks of Air India and Vistara, the unified airline may pursue new routes and markets, leading to growth opportunities for the flying crew.
- Fleet Expansion: The merger may result in fleet expansion, providing more flying opportunities and possibly leading to an increase in the hiring of additional crew members.
Creating a Unified Airline
Vistara, a joint venture with Tata Group (51%) and Singapore Airlines (49%), is merging with Air India to form a unified full-service carrier.
Simultaneously, Air India’s subsidiaries, AIX Connect and Air India Express, are being merged to create a unified low-cost airline.
Air India’s official statement highlighted the creation of two separate manuals for the full-service and low-cost carriers, reflecting the alignment on best practices and common operating procedures.
As the merger with Vistara progresses, the airline aims to emerge as a stronger, more integrated entity within the Tata Group.
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