Air India is targeting the completion of Vistara’s merger with itself by the end of this year and integration of over 7,000 employees will start from June in phases, as the Tata group airlines push for a rapid transition to one full-service carrier under the Air India brand. In a town hall meeting on Monday, the chief executives of Air India and Vistara presented the staff with updates on the merger, according to sources in the know.
This timeline given by the Air India group leadership is earlier than what was stated previously. In January, Vistara’s chief executive officer (CEO) Kannan had said that the Air India-Vistara merger was likely to be completed by the middle of next year. Kannan is also the chief integration officer at the Air India group.
The Air India-Vistara merger has received most of the requisite regulatory approvals, including nods from competition watchdogs of India and Singapore. The hearings for approval before the National Company Law Tribunal (NCLT) have concluded and the order is awaited, and the application for approval of Singapore Airlines (SIA) in the merged entity has also been filed. SIA, which owns 49 per cent stake in Vistara, will hold a 25.1 per cent stake in the merged Air India.
Apart from merging Air India and Vistara, the group is also in the process of merging its budget carriers Air India Express and AIX Connect (formerly AirAsia India). Once both the mergers are complete, the Air India group will have a full-service carrier Air India and a low-cost airline Air India Express.
Air India’s CEO Campbell Wilson and Vistara CEO Vinod Kannan informed employees that while the last of the necessary approvals are expected soon, the operational process harmonisation exercise is progressing well, it is learnt. According to sources, the two airlines have operationalised an integrated pilot upgrade sequence for group level career progress opportunities for the flight crew, and around 120 pilots have already been seconded between Air India and Vistara.
The merger had led to concerns among a section of Vistara pilots, who were ostensibly unhappy about the new pay structure in line with that of Air India and were also concerned about career progression opportunities in the merged airline. These were among the reasons why a sizable number of Vistara pilots had called in sick en masse early April, leading to major network-wide disruptions in the airline’s operations.
In Thursday’s update on the merger, the staff were informed that over 60 Vistara employees had already been seconded to Air India to accelerate the integration efforts, and assessment for over 7,000 employees has been completed with talent fitment in advanced stages, it is learnt. Of these, around 3,500 are flying staff while 2,500 are non-flying staff. In all, Air India and Vistara are estimated to have nearly 24,000 employees.
On the functional integration front, harmonisation of operating procedures was already underway and functional teams are working closely for the operational integration.
According to sources, Wilson and Kannan told employees that a merit-based system is being used for employee fitment for the merged entity, and a people integration is a key focus area in the merger. The merged airline will have five Vistara employees for every 12 Air India employees, and managerial roles will be increased by one-and-a-half times in a bid to provide requisite career progression opportunities to employees, it is learnt.
People integration is often among the most tricky and complex parts of mergers, particularly among airlines. Apart from bringing about pay parity, integrating employees coming from different organisational cultures can be extremely daunting. If not managed well, mergers can potentially lead to mistrust among employees coming from different organisations due to friction over seniority, chain of command, and apprehensions over career progression prospects in the larger merged entity.
