This week, the Tata Group announced that it plans to merge Air India and Vistara, creating one full-service carrier for the market. After negotiations, Singapore Airlines joined the deal as well, taking up a 25% stake in the new, expanded airline and creating a new partnership with the flag carrier. So how will the two airlines work together and how will it benefit them?
Asia and Oceania
Singapore Airlines (SIA) has had a successful partnership with Vistara in the last seven years, launching new routes to India and offering codeshares far beyond. However, pairing up with Air India will take this operation to a much bigger stage, with more international destinations on offer now and hence, more opportunities.
As Air India expands in the next few years, it will be hoping to take advantage of Singapore Airlines’ strongly established network through Southeast Asia, East Asia, and Oceania, offering codeshare flights to the likes of Australia, New Zealand, Jakarta, Manila, and many more cities that it currently doesn’t serve or have a larger market.
This will be made easy by Vistara and Air India’s existing network to Singapore, which saw Pune as the latest city to join the route map. Once combined, SIA will be able to funnel even more passengers into its hub at Changi International Airport and take advantage of the growing and underserved market.
Europe and North America
Europe is one market where Singapore Airlines and Air India do not overlap too much, with both offering robust networks to the continent. While SIA has a larger route map, it will struggle to attract much of the westbound traffic from India due to the additional time needed to fly and plenty of alternatives from the Middle Eastern giants.
However, the same cannot be said for North America, which may well be a big area of gain for both carriers. Singapore Airlines’ strong network on the West Coast of the US could be advantageous to Air India, which currently doesn’t serve cities like Seattle or Los Angeles.
Similarly, due to the distance, the Singaporean carrier doesn’t offer connections to Washington D.C. or Chicago, which make for opportunities. Canada will be another target market, with SIA serving Vancouver and Air India flying to Toronto as well.
The North American routes will put SIA/Air India directly in competition with the Middle East three (Emirates, Qatar, and Etihad) once more, with both offering vast schedules out of India. Depending on regulatory approval and how the partnership is structured, the two airlines have a chance of finally breaking up the dominance of the ME3 for the first time in decades.
Domestic
Finally, the biggest advantage of the Air India-Singapore relationship will be access to India’s domestic market. According to Airbus, Indian airlines only capture 36% of the revenue from international operations, with the rest going to foreign carriers that fly to nearly a dozen domestic airports. As the market for international passengers increases in the next decade, Air India will be sure to grab back revenues, a wave that Singapore Airlines could ride to its own success.
Indeed, the first step will almost certainly see SIA place codeshares on domestic flights within India, hoping to attract passengers to connect through Singapore. From there, the partnership will only grow, and we’re excited to see where it goes.
Source : SimpleFlying
