Indian carrier Vistara is in the process of transition from domestic to a regional operator. Neelam Mathews monitors the changeover.
Within just four years of its launch, Tata Sons and Singapore Airlines, owned by Vistara have shown it means business. With a background of cut-throat competition, scraping low fares and aviation fuel riddled with taxes and amongst the highest in the world, the airline business in India is tough.
Vistara is the only private full-service airline currently operating in 24 domestic destinations. The airline is now venturing further afield into the regional operator market and whilst currently making a loss, it anticipates that the launch of international flights known to give better yields, which may ultimately boost its fortunes.
With a continuing rise in the country’s middle class and an economy growing annually at 7.5 per cent for the next few years, this has led domestic carriers such as Vistara to spread their wings on lucrative routes in the region and become regional operators. Jet Airways’ closure leaves a notable gap in the international market.
According to a report by the Centre for Aviation (CAPA), around 40 additional narrowbodies will be deployed on regional international routes next year. The report warns that in the race to fill the space left by Jet Airways, decisions on some new routes may be rushed.
The initial international expansion by budget regional operators will be on routes of up to five or six hours, within the non-stop range of re-engined narrowbodies. However, one-stop narrowbody services to Europe (via Central Asia) are expected to launch shortly, as are long haul non-stop services.
Despite being in a market studded by budget regional operators and fares generally higher than low-cost carriers, Vistara sees hope given the shortage of traditional regional carriers. “Contrary to the opinion that there’s no room for full-service carriers in India, we believe there’s a large segment that values the flying experience,” Leslie Thng CEO of Vistara states.
“Most of the medium-haul, international regional routes from India are either served by a dated product or by aircraft with cabins that aren’t suitable to most people for more than three to four hours of flying,” believes Thng.
“People in India now view travelling as one of the most important parts of their lifestyle with the [travel] segment on a high growth trajectory. Such travellers do not mind spending a little more for extra comfort. Our product on medium-haul routes will be exceptional and we’re confident of achieving great success.”
Vistara’s close association with Singapore Airlines should help the carrier’s service culture whose customers will be expecting an identical continuity in service. Vistara, as a startup, has dared to innovate. It has introduced a point-based loyalty programme rather than miles-based; an in-flight dining experience in all cabin classes and a robot to assist travellers at airports.
Above all, it is the only airline with a premium economy class in India taking its three-class configuration to nearby markets in the region with its A320s and some 737s, acquired on short term leases from Jet Airways.
Thng says the carrier was committed to offering a three-class configuration on all international routes. However, at present Vistara is flying the 737-800s with a two-class configuration on the Singapore route, “as the existing A320 aircraft we have aren’t best suited to fly non-stop to Singapore.”
The carrier plans to use its new A320neos on the Singapore routes with their capability to fly non-stop to Singapore. The aircraft presently flown to Singapore by Vistara is a leased 737-800 formally with Jet Airways.
Its also believed that Vistara recruited nearly 600 former employees of the failed Indian carrier, including pilots, cabin crew, engineers and other staff to support Vistara’s expansion. From early August, the airline launched two daily flights to Singapore — one from Delhi and one from Mumbai.
The new services allow for convenient, one-stop connections to and from several other Indian cities beyond Delhi and Mumbai, including but not limited to Amritsar, Chandigarh, Jammu, Lucknow, Ranchi, Raipur, Srinagar and Varanasi. The airline says it will soon expand its international network further to other destinations.
“We’re excited to start with Singapore as our first international destination, which we see as a very important market given the opportunities it presents for corporate, business as well as leisure travel,” states Thng. He adds that the start of Vistara’s international operations and partnerships with airlines across the globe will help provide seamless connectivity to customers. “It also gives us more flexibility to feed traffic on to our domestic network.”
Given Singapore’s hub status could Vistara make it as a secondary hub? Thng responds: “Vistara follows a hub and spoke model for its network, and our primary hub will continue to be Delhi. Some of our international flights will operate from other key Indian metros as well, but we don’t have any plans for international secondary hub at this point.”
There is general anticipation that for regional Asian destinations the carrier is more likely to introduce more point to point routes once it gets more aircraft.
“We are a relatively young airline, and we don’t want to be restricted in our choice of partners at this point. As we expand, we will continue to look for like-minded partners in regions across the world to provide our customers with an extended worldwide network.”
Meanwhile, Bangkok, a three-and-a-half-hour flight away from Delhi, probably doesn’t have the makings of a secondary hub for Vistara, but the demand is immense. Bangkok is a popular destination for many Indian travellers and the market just gets bigger.
Generally, opportunities for international aviation from India are massive — from business travel, visiting friends and relatives, and tourism both inbound and outbound.
Starting 21 August, the airline will have launched its second international route to Dubai. The airline will use its A320neo aircraft with three-class cabin configuration to fly to and from Dubai, making Vistara the first airline to offer the choice of premium economy class for travel between India and the UAE in addition to economy and business class.
“We will give the global audience a taste of true Indian hospitality with a modern, global, more cosmopolitan touch from a product and service standpoint,” Thng promises.
He adds the continuous influx of international trade, business and tourists all year round, especially given the strong economic and cultural ties between India and the UAE. Dubai makes a key addition to Vistara’s growing network. It’s widely rumoured the carrier will start flights to Sri Lanka and Nepal later in the year.
Last year, Vistara placed its aircraft order of a combination of purchased and leased aircraft totalling 50 from the Airbus A320neo family (including the A321neo), for domestic operations in India as well as short and medium-haul international routes, with deliveries scheduled between 2019 and 2023.
Additionally, the airline has purchased six 787-9 Dreamliner aircraft that are scheduled to be delivered between 2020 and 2021 and will be used for long haul international operations.
“Vistara will use its existing fleet as well as the new narrowbody aircraft (including the A321neo), to fly to international destinations within a range of three to seven hours and densify its domestic network,” Thng explains. “The 787-9s arriving next year will be used for long haul operations for destinations within 11 hours of flying time in the first phase.
In the next phase, the airline will consider going further expanding to markets as far as the US and Australia.
At present, Vistara has 30 aircraft comprising 23 A320s and seven 737-800s with two more to be added soon. Back in May, the airline announced to have leased an additional six aircraft from BOC Aviation to accelerate its growth in the domestic market.
As part of the agreement, Vistara leased four 737-800s delivered in May 2019 and two A320neo powered by CFM LEAP 1A engines, scheduled for delivery in the second half of 2019.
“Some of the deliveries from the aircraft order we placed last year are expected in this financial year [by the end of March 2020], and we expect the total count of aircraft to reach around the 40 plus mark by then and this will include two of the six 787-9 we purchased.”
By 2023, Vistara would have inducted all purchased and leased aircraft from Airbus and Boeing and have them in addition to most of its existing aircraft. The regional operator also has purchase rights to four more aircraft from the 787 family and seven more from the A320 family.
A CAPA report states that Vistara may be the greatest regional operator beneficiary of the exit of Jet Airways, its full-service competitor. Challenges remain as it expands to maintain the quality of the product and service which the carrier has become recognised for, whilst accelerating the rate of growth and inducting Jet aircraft.
CAPA analysts call the decision to induct 737 equipment from Jet, “surprising” given that Vistara is an all-A320 operator. Aside from the increased cost and complexity of operating two aircraft types, Jet’s aircraft are older than Vistara’s own fleet and are configured with two classes, in contrast with Vistara’s core fleet which is newer and has three classes.
This may impact the product and service experience. Provided that Vistara can manage the costs and complexity of everything that it has on its plate, this is a unique opportunity for it to emerge as a leading full-service regional operator, CAPA states.
In respect to operating a dual A230 and 737 fleet Thng had previously mentioned that the decision to induct a different aircraft type in the fleet is a carefully evaluated one, which is both, economically and commercially viable for the carrier.