Air India-Vistara Merger: According to The Economic Times (ET), Air India and Vistara have informed the Competition Commission of India (CCI) that their merger will not lessen industry competition. According to the article, carriers informed the competition watchdog that there are enough services from competitors on the routes that the combined firm will fly, citing sources in the know. According to the individuals mentioned above, the CCI investigation may not have a significant influence on the airlines’ business, but it may delay the merger.
Evaluating Competition Impact in the Air India-Vistara Merger
A person aware of the matter was quoted in the ET report as saying, “Anti-trust regulators around the world examine the impact on competition through an origin and destination (O&D) approach to identify relevant market.” In order to create a single full-service airline, the Tata Group is integrating Vistara with Air India. The new company will be 25.1% owned by Singapore Airlines. However, AirAsia India is continuing the process of joining forces with Air India Express to form a single low-cost division of Air India. A full-service airline and a low-cost airline are not different, Air India explained to the CCI in further detail regarding the merger. They utilise the same fuel, operate out of the same airports, and incur comparable landing and parking fees. The sole full-service airline operating out of India after the merger will be Air India.
The Network Strategy of Full-Service Airlines
Instead than examining the profitability of individual routes, full-service airlines frequently concentrate on their network of routes. For instance, a full-service airline like British Airways will keep operating on a route even if there aren’t enough customers because it’s a feeder route for British Airways’ wider network of services. Full-service airlines fly a variety of aircraft with differing capacities on a variety of routes carrying a variety of passenger loads. By doing this, they may maintain their operations’ efficiency while accommodating changes in the number of passengers.
The Route-Focused Approach of Low-Cost Airlines
When there are not enough passengers, low-cost airlines frequently cease operations. In their situation, the emphasis is on the revenue generated by specific aircraft routes. Low-cost airlines typically run flights of the same design and type, avoiding the need for them to set up maintenance plans for several aircraft types. The cabin crew does not need to be educated for several aircraft types while operating aircraft of the same type, which is another advantage.
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