Air India looks to triple domestic market share through ‘Vihaan.AI’
Air India aims to triple its domestic market share to 30 per cent in five years with investments in new aircraft, technology, and improvements in customer service. This is a part of its transformation plan called “Vihaan.AI” that was released on Thursday.
Air India underwent a change in ownership at the end of January. The Tata group, which took over the reins of the airline, has already announced leases of 30 aircraft and restoration of grounded planes. It is also negotiating a mega aircraft order with Airbus and Boeing.
As a part of “Vihaan.AI,” Air India has put in place a road map with clear milestones focusing on network growth, revamped customer proposition, improvement in punctuality and leadership in innovation and sustainability.
“Over the next five years, Air India will strive to increase its market share to at least 30 per cent in the domestic market while significantly growing the international routes from the present market share. The plan is aimed at putting Air India on a path to sustained growth, profitability and market leadership,” the airline announced.
Air India carried 814,000 domestic passengers in June and registered a market share of 8.4 per cent. Market leader IndiGo had a domestic market share of 58.8 per cent. Two other Tata group airlines – AirAsia India and Vistara – had a domestic market share of 4.6 per cent and 10.4 per cent, respectively.
Ameya Joshi, aviation analyst and founder of aviation blog “Network Thoughts”, said the current market share of Air India group (including Vistara) is between 20 to 25 per cent and this is without the best utilisation of its assets. When all aircraft of Air India and AirAsia India are deployed, the market share will go up by another two percentage, he said
“However, this (today’s announcement) clearly indicates a merger between Vistara and Air India (will happen). And then the total group market share to 30 per cent is achievable and sustainable,” Joshi noted.
The Tata group has already received Competition Commission of India approval to merge AirAsia India with Air India. Tata group and joint venture partner Singapore Airlines are discussing the road map for Vistara, but haven’t taken a call yet on whether to merge it with Air India or continue to operate it separately. A Singapore Airlines spokesperson said: “We do not comment on any confidential discussions that we may or may not be having with our partners.”
Joshi said that Air India on its own – without merging with Vistara — can not increase its domestic market share to 30 per cent in five years.
IndiGo – which only has economy class seats till date in its planes — is planning to remake itself to become an airline of choice on long international routes. In June, its then CEO Ronojoy Dutta had told Business Standard that IndiGo is looking very closely at dual-class configuration (business and economy) for the A321XLR. IndiGo will start receiving A321XLR from 2024-end onwards.
Air India, as it operates wide body planes which have bigger fuel tanks, is the market leader on long international routes that reach as far as the US.
An executive of Air India’s rival airline said that if IndiGo choses to have business class on its XLR planes, it will be able to give strong competition to Air India group on certain international routes as the former is known to run lean operations with lowest unit costs.
“However, on lucrative routes such as India-US and India-Canada, Air India will have a chance to increase its dominance as XLR can not travel that far on a non-stop flight,” the executive added.
On Thursday, Air India’s Managing Director and Chief Executive Officer Campbell Wilson said that the transformation has already started as a slew of initiatives in areas like refurbishing cabins, serviceable seats, in-flight entertainment system are already underway.
“We are also adopting proactive maintenance and refining flight schedules to enhance on-time performance. Our fleet expansion will involve a combination of both narrow-bodied and wide-bodied aircraft to cater to varied network needs,” Wilson added.
The airline said its transformation plan has been prepared taking feedback from the staff and focuses on exceptional customer service, robust operations, industry-best talent, industry leadership, commercial efficiency, and profitability.
“While the immediate focus of the airline remains on fixing the basics and readying itself for growth (Taxiing Phase), the more medium-to-long-term focus will be on building for excellence and establishing scale to become a global industry leader (Take Off & Climb phases),” it said.
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