‘If you want to be a Millionaire, start with a billion dollars and launch a new airline.’

That is one of the most famous quotes in aviation, said by none other than Sir Richard Branson. The nature of the aviation business is such, that while it is a glamorous business to be in, it is subject to all sorts of uncertainties which are not in the control of the airline. Geopolitical issues, fuel prices, weather and the vagaries of nature, everything affects this business. An airline can be ahead of the curve and be prepared for some of these, but not all.

The fact that Jet Airways is in a liquidity crunch is something that has come to the fore a few months ago, and ever since then, their troubles have been played out publicly almost on a daily basis. Some days there is news about their employees not being paid in time. On others, they haven’t paid out the lounge operator in Mumbai, and hence guests get turned away leading to a social media outrage.

Unfortunately for Jet Airways, these troubles are playing out in their 25th year, where I’d initially thought there would be more joy flying with them. Jet has been a very successful airline over the years, raising the bar on customer service when the bar was falling for flying Air India. I know of many corporate customers in Europe who switched to flying Jet Airways over their home carriers on their Indian visits because of the service levels.

But over the past few years, those service levels have been inconsistent due to the fare wars and the identity crisis that Jet Airways underwent. While Kingfisher Airlines was serving up prawn entrees on their flights, Jet Airways was trying to decide which flight was going to get a meal or not based on if it was Jet Airways, JetLite or JetKonnect.

Me and several corporate travellers, who are budget insensitive, continued to patronise Jet Airways because of their network and a very strong loyalty program in JetPrivilege. Others switched to IndiGo for their on-time performance.

Then came a fresh lease of life in Vistara, which was the second coming of Tatas into aviation along with their long-time friend Singapore Airlines. As much of a fresh approach, Vistara brought to flying with their high standard product and focus on the guest all over again; they were not able to garner a significant foothold because they could not gain slots at key metro airports which are premium markets.

Vistara has kept at their measured growth, but they’ve been flanked on all frontiers by competitors such as IndiGo and Jet Airways who have kept all the prime slots to themselves, and in the case of IndiGo, also kept pricing low to bleed everyone else out.

Now, with Jet Airways in a downward spiral, discussions are on, as per the media reports, of Jet Airways exploring a deal with the Tata group. In this deal structure, it seems, Tata will take on complete control of Jet Airways, merging it in an all-stock transaction with Vistara, and the promoter Mr Goyal will have a stake to start with, which will be subsequently bought out by the Tata – Singapore Airlines combination. Etihad, a 24% shareholder, will also be given an opportunity to make a similar transaction.

As you read this column, if the media got it right, there will be a discussion in the Tata board whether to pursue this deal or not today. They seem to be keen to take it forward. In light of these discussions, I’ve already started receiving text queries such as, “ So shall I switch to earning Air Vistara points from Jet miles”.

Let me pour some cold water on that thought, for a moment. M & A bankers, and I have been one, have to look at many things before a deal goes through. If the Tatas pursue this deal and win, they are certainly getting a bargain for the kind of network, fleet and slots it took 25 years for Jet Airways to build. I’m not sure, however, if Delta is still in a race to buy a stake as well. If they are, a bidding war may be imminent.

But beyond the balance sheet and the numbers, which have to make sense for a transaction to go through, a lot of other things need to work out too. Airline mergers talk combining different platforms, legacy computer systems, and thousands of procedures that are used across pilots, ground services and cabin crew. A look at the failed merger of Air India and Indian Airlines which gives us a sense of what happens when things don’t work out.

Here are some things that would need to work before this airline merger, fondly nicknamed Vista-Jet for now, indeed becomes a world-class airline:

• Airline fit: Are the two airlines a fit? The route network would need to be looked at, as much as the fleet. The route network won’t be a problem I assume due to the newness of Vistara, but the fleet should be a discussion to be had. Jet Airways has traditionally been an all Boeing operator, with some Airbus planes thrown in, while Vistara chose to go with Airbus narrow-body aircraft and some Boeing 787s thrown in, which they ordered earlier this year. The good thing is that most of these planes are on a lease, so an airline could work with one fleet and choose to return the other. Not as painless as it sounds, but at least the capital is sitting on someone else’s books.
• The brand name: I don’t even think this is the first thing to be discussed, but it will be an all-important discussion to be had. Jet Airways or Vistara? 9W or UK? My initial guess is that both airlines, and hence brands, will work separately under a single holding company, given they would have different Air Operator Permits, before they first start with synergies, codeshares, and eventually, combining forces under a single legal entity. Ultimately, one brand name will survive. Would Tata’s
  want to go with Vistara, or is it going to be Jet Airways with its well-known international reputation?
• The Product: Following from the Brand name discussion will be the product discussion. While both airlines are “full-service” carriers, the level of service they offer is significantly different. Vistara was built on the premise of keeping the soft product the best, so they focus a lot on the intangibles. Jet Airways, on the other hand, left all that behind long ago and crew does not have as much leeway to make the guests feel special. Their full-service nature depends a lot on the mileage program and ground benefits.
  Will you eventually see aubergine and gold or yellow and blue liveries across the Indian skies? Will you see a choice of three entrees in a premium cabin or just two? Will your airline focus on asking you a detailed meal choice, or just put something edible on your tray table after asking Chicken or Veg? A plethora of questions to answer there before you see one airline.
• Human Resources & Culture: Another question for a later date, but this is where most airline mergers take years and years to go through really or eventually fail. People. The entire airline industry works on vintage. It is joked amongst the observers such as us, that the three most important things for people with flying-duties such as Pilots and Cabin Crew are Seniority, Seniority and Seniority. The more senior you are, the better you get paid, and of course, you get your choice of work schedules.
  For many years, the Air India and Indian Airlines crew worked on different pay scales, working hours, schedules. They were never truly integrated as an airline. Vistara is certainly new-generation and nimble, and Jet Airways is old school and has a large hierarchy. It will be essential to have the people merger worked out correctly and sensitively. This issue will work through the length and the breadth of the airline. For instance, Jet Airways has labour unions of some form, Vistara does not.
• Reservation systems: The reservation systems are the first point of customer contact, with computers that continuously work towards managing schedules, generating your bookings, working the finances and many more such things. Vistara works with Amadeus; Jet Airways works with Sabre. It is a mammoth task to integrate reservation systems. United & Continental, during the merger, literally came to their knees with reservation systems merger not going through as planned
  on day one in 2012.
• Frequent Flier Program: While Jet Airways runs an independent program in JetPrivilege which is majorly owned by Etihad Airways, Vistara runs an in-house platform. Over the past four-five years, JetPrivilege has resurrected its position as the best frequent flyer program in the country, with enough inventory open for redemption tickets, and the addition of new partners over the years.
  Those 8 million members are a gold-mine for any airline, and the frequent flyer programs of both airlines are built on different philosophies. Will the frequent traveller march away if they chopped away some of the liberal benefits Jet Airways offers? Or does the new combined airline not have to worry because IndiGo does not provide an option and Air India does not count. We already see in the hotel space people being frustrated with the new Marriott program taking their business
  elsewhere.
• Other airlines grab market share: The whole affair of merging these two airlines will mean business will not be as usual for a while. The airlines’ management will focus inwards on the merger for at least a year, if not more than that, and that would give other airlines time to take away passengers, and perhaps even slots.
• It’s Expensive: Last but not least, it is expensive to merge airlines. Repainting planes in itself are one significant cost of millions of dollars, not to forget, an investment of time. Apart from that the costs of rebranding everything is going to be massive.

To my friend who asked me the question about Vistara Points or JP Miles, my answer, then, is that it is a question that will take a while to answer because there will be many other questions to answer before that.
Needless to say, the fruit of patience should be for the best, because the Tata Group is passionate about aviation as we all know, and this merger would immediately help them gain market share and scale to be able to command a price for their full-service product, rather than being dictated on the terms of their no-frills carrier friends.

So, while you wait for a better full-service experience to emerge, be also ready to pay a price which will not be ₹ 2,500 on the Mumbai – Delhi tickets, but significantly higher.

Read my “Business of Travel” column every Friday on CNBCTV18.com. This column has been reproduced.