Air India becomes last full-service carrier in India as Vistara merges

Mumbai/New Delhi Nov 10 (PTI) When Vistara folds up into the Air India Group on Monday, the number of full service carriers in the fast-growing Indian aviation space will come down to just one from five in a span of over 17 years.

Also, the merger — that will see Vistara's 49 per cent owner Singapore Airlines holding 25.1 per cent stake in Air India post the merger — will mark the sunset of another Indian airline jointly owned by an overseas carrier after the liberalisation of foreign direct investment norms.

In 2012, Prime Minister Manmohan Singh-led UPA government allowed foreign airlines to buy up to 49 per cent in a domestic carrier, which later resulted in the now defunct Jet Airways securing 24 per cent stake from Gulf carrier Etihad besides the birth of AirAsia India and Vistara.

Vistara is also the only full-service carrier to start operations in the last 10 years.

Since the merger of full-service carrier (FSC) Indian Airlines with Air India in 2007, at least five FSCs dotted the Indian skies.

As years passed by, Kingfisher and Air Sahara faded away while Vistara took flight in January 2015. Kingfisher went belly up in 2012 while Air Sahara, which was acquired by Jet Airways and renamed as JetLite, sank with Jet Airways in 2019.

FSC Jet Airways that flew for 25 years before getting grounded in April 2019 due to financial turbulence is set to be liquidated.

From November 12, the enlarged Air India will remain the country's lone full-service player.

Coming to Indian carriers with foreign ownership, the first was Jet Airways where Abu Dhabi's Etihad Airways snapped up 24 per cent stake.

Then came AirAsia India -- 49 per cent owned by Malaysia's AirAsia and the rest was with Tatas -- followed by Vistara -- where Singapore Airlines holds 49 per cent stake and 51 per cent is with Tata Group.

With rising air traffic and changing travel patterns, many no-frills airlines are dominating the skies worldwide and India's dominant carrier is IndiGo.

According to a senior airline official, the line differentiating a full service and a low-cost carrier is somewhat blurred.

For instance, some of the budget airlines also offer business class seats.

Among others, FSCs strive to provide more comfort to passengers during travel and the services, including meals, are included in the ticket price.

Also, they mostly operate different types of aircraft and broadly, these airlines focus more on overall network profitability.

In the case of low-cost carriers route-specific profitability, ancillary revenues and mostly single type of planes are among the key elements that help in ensuring cost-effective operations. PTI