Tata's Merger Decision Raises Concerns Over Vistara Brand Equity and Customer Loyalties

In a bold move to revamp its operations, Tata has merged two of its full-service airlines, Air India and Vistara. While the decision is expected to bring about cost savings and operational efficiency, concerns are growing over how Tata plans to tackle brand equity and customer loyalty.

Experts warn that mergers can be fraught with risks, particularly when it comes to preserving brand identities. Interbrand and Harvard Business Review studies suggest that a staggering 85% of mergers fail to return expected shareholder value, often due to unclear business strategies, cultural integration issues, and neglecting brand equities.

Ashish Mishra, CEO of Interbrand India and South Asia, shares his thoughts on the situation: "The ambition was to establish [LATAM] as the airline group connecting Latin America with the world. Drawing inspiration from the region's geography, LATAM symbolises not just a country but an entire region."

However, Tata's approach to merging Vistara into Air India has raised eyebrows among aviation enthusiasts and industry experts. Questions now surround how Tata will protect and transfer Vistara's valuable brand equity into Air India.

In the airline business, brutal cost control remains the most critical strategy for maintaining a healthy operation. Yet, destroying value during mergers can have long-lasting consequences. "Could it [Tata] have done the migration better? Could it have found a way to retain the Vistara brand or at least some of its assets within Air India?" ask experts.

Historically, successful mergers involve retaining parent or endorsing brands for an extended period, ensuring they continue to fuel early growth and strengthen equity flows. Tata may benefit from taking a similar approach with Vistara's unique brand identity and customer loyalty.

While Vistara fought valiantly in its final years, the abrupt halt of flights left many flyers feeling a sense of loss. As the industry continues to navigate challenges such as pandemic-related travel restrictions, it remains to be seen how Tata will successfully translate Vistara's strengths into Air India Vistara, or if they can regain customer trust.

With the stakes high and the airline business landscape constantly evolving, one thing is certain – only time will tell whether Tata's merger strategy will yield positive results or falter under pressure.