MANAGING CHANGE: MERGER OF VISTARA AND AIR INDIA

Ravi Sharma and Neha Nair, two pilots of Vistara Airlines, discuss their perceptions of the change process as Vistara and Air India are to be merged. Both were very proud of their association with Vistara. It had a good brand reputation with a loyal customer base, compensated their employees well, promised them good career prospects, and provided an excellent organizational culture. It had experienced healthy growth over about a decade of its operations but was yet to achieve profitability. They had been told that the merged airline would become profitable. However, they were concerned. First, they wondered whether a merger with Air India was the only option for Vistara’s future? Second, if a merger was the optimal option, should not the merged entity retain the Vistara brand? Third, they felt that their career growth prospects, which looked very promising in Vistara, would be impacted after the merger with a larger airline with a more senior and experienced workforce. Fourth, they deliberated over the new compensation system. Could Vinod Kannan, the CEO of Vistara, have done things differently to avoid the stressful situation? What could Kannan do now to avoid further disruption of operations and ensure a smooth merger.

Learning Objectives

When organizational changes are not strategically aligned with the earlier direction of the organization, and there are potential impacts on organizational culture, career prospects, compensation etc. and consequently resistance from employees should be expected. The objective of the case is to help participants understand how a change leader can anticipate and prepare for some of the resistance and chart a change journey that has minimal disruptions for all stakeholders.