Air India and Vistara: Will Merger Uplifts Employees’ Spirit

Vinod Kannan CEO of Vistara said "We want to make sure that everyone in Vistara does have a role (in the merged entity). It is not a merger for cost-cutting or efficiencies; it is a merger for growth"⁴⁴.

In November 2022, the Tata Group announced combining Air India and Vistara as full-service airline47. Since then the employee unions of both airlines raised their concerns about “inequality in treatment, lower pay, job security and career progression”38. Most pilots were unhappy about pay structure, workload, work-life balance, pay parityand new organization culture⁵⁴.

This entire study is a case study-based approach. This paper adopted a secondary-based case approach. Information for this case were collected from various secondary sources.

Air India CEO and MD Campbell Wilson and Vistara CEO Vinod Kannan held a town hall meeting with employees⁴⁴. The best fit among senior to mid-level executives to be retained, if any roles were available remaining others would be considered. After the new compensation structure, pilots got 40 hours instead of 70 hours⁶. In February 2024, the CEO of Vistara dismissed some pilots who took sick leave against the new pay structure. An integrated pilot sequence was introduced to maintain the seniority of pilots between the two airlines³⁸. However, it did not apply to contract employees. After the merger, these employees' contracts won't be renewed because of the redundancies of the jobs⁴⁷. A letter was written to Tata Son'schairperson N Chandrasekaran by unions stated that pilots were considered “reminiscent of bonded labourers” andin some instances pilots were threatened by the HR⁶¹.

This case examines the merger challenges faced by two large organizations, with a particular focus on resistance to change management practices within the aviation industry. It serves as a valuable resource for classroom teaching, offering practical insights into both merger dynamics and the complexities of managing organizational change.

Generally, the merger supports the companies in organizational restructuring, workforce realignment and reinforcement. However, Vistara faced a huge setback in this case. The employees of Vistara faced multifaceted challenges like pay cuts, promotion, cultural issues, humiliation, threats, bonded labourers and disrespectetc. Would Air India address all these issues and take care of the Vistara employees at par with Air India employees? In the long run, would this transition be a smooth one?⁵⁴.