It’s a market that has attracted the tiny Asian city-state for decades. Singapore Airlines had partnered with Mumbai-based conglomerate Tata Group in the failed privatization of Air India Ltd in 2001. New Delhi only finally managed to sell the flag carrier to Tata last year . During this 20-year period, rivals from the Middle East tried to penetrate India. Etihad Airways PJSC has invested in Jet Airways India Ltd., whose founder Naresh Goyal bankrupted his carrier. When Qatar was negotiating six years ago for more flights from Indian locations to Doha, it was told to start a new airline. Qatar Airways Ltd. even announced a brand new short-haul carrier for India. Although nothing came of this plan, the company has often expressed its desire to acquire a stake in IndiGo, India’s largest airline.
The Tata group has flirted with others, including Singapore Airlines’ big rival, AirAsia Bhd., with which it launched AirAsia India. Goh, who became CEO in 2011, has stuck with Tata, taking a 49% stake in its full-service operator Vistara. In the seven years that Vistara has been flying, it has yet to turn a profit, although it now flies to nine overseas destinations and covers 31 cities in India.
But Goh’s loyalty and patience may finally be rewarded: Campbell Wilson, CEO of Singapore Airlines’ no-frills Scoot brand, joins as CEO of newly privatized Air India. This is not a case of Tata poaching senior talent from her partner, but rather the start of a deeper relationship. Wilson’s move – plus the Tata Group’s plan to lease 700,000 square feet of retail space near New Delhi airport to house the offices of Air India, its low-cost subsidiary Air India Express as well as Vistara and AirAsia India – prompted The Morning Context to ask if a merger was in the works. The news site previously reported that Singapore Airlines and the Indian conglomerate had agreed to separate Vistara and Air India for two years. This delay in deciding on a big Indian wedding may no longer be sacrosanct, he said.
For the Tata Group from salt to software, consolidating its airline business will mean cost savings, for example, by removing overlapping routes and perhaps losing the AirAsia brand along the way. Meanwhile, a substantial stake in Air India will be the crown jewel of Singapore Airlines. Its home base in Singapore is well suited as a hub for international passenger flows between India and the West Coast of the United States.
Vistara, which has already launched some European routes, is also planning direct flights to the United States, allowing Singapore Airlines to gain a foothold in the lucrative westbound market from India, long dominated by Emirates Airline, Etihad and Qatar Airways. If the New Zealand-born Wilson, a Singapore Airlines veteran, can pull off an Air India-Vistara integration, Goh can use the model to roll out his multi-hub strategy in other markets. Hopefully, these efforts won’t drag on for two decades. Or they may have to be concluded by the 58-year-old CEO’s successor.
More from this writer and others on Bloomberg Opinion:
• Has your pilot had suicidal thoughts? It’s OK: David Fickling and Tim Culpan
• Privatization of Air India comes two decades late: Andy Mukherjee
• In Singapore, a chicken ban is a serious threat: Daniel Moss
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Andy Mukherjee is a Bloomberg Opinion columnist covering industrial companies and financial services in Asia. Previously, he worked for Reuters, the Straits Times and Bloomberg News.
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