Vistara Start Date

[Kristee Summerford]

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Vistara is a joint venture of Tata Sons Private Limited and Singapore Airlines Limited (SIA), wherein Tata Sons holds 51% stake in partnership and Singapore Airlines owns 49% stake. The company is registered as TATA SIA Airlines Limited.

On January 9, 2015, Vistara started its operations with a maiden flight from Delhi to Mumbai. In a short span of time, Vistara has rapidly expanded its footprint, both in terms of network and service proposition. Vistara connects 50 destinations in and outside of India, and operates over 300 flights a day with a fleet of 70 aircraft including 53 Airbus A320neo, 10 Airbus A321neo and 7 Boeing 787-9 Dreamliner. Vistara has already flown more than 65 million happy customers since starting operations.

It is not yet known what would happen to the co-brand credit cards that Vistara offers in partnership with several banks, including Axis Bank, State Bank of India, and IDFC First. The airline said that the updates regarding this will be shared in the coming weeks.

Earlier this week, the CEOs of both the airlines held a townhall meeting with their employees, and informed them that more than 7,000 employees have been assessed and their roles and responsibilities would be clear by the end of June.

Tags: air india, airlines, aviation, aviation industry, aviation news, frequent flier programs, frequent flyer programs, frequent flyers, iag loyalty, india, india travel, indian airlines, loyalty, mergers, vistara

A partnership of Tata Sons Limited and Singapore Airlines Limited, Vistara is registered as TATA SIA Airlines Limited. Ever since it started operating from 2015, it has changed the experience of air travelling with seamless service and excellent hospitality.

Vistara has 32 aircraft currently. The operating aircraft are Airbus A320-200, Airbus 320neo, and Boeing 737-800. The number of Airbus A320-200 aircraft is 13, Airbus 320neo aircraft is 10 and Boeing 737-800 aircraft is 9.

Vistara connects 30 destinations in total covering 27 domestic and 3 international cities. The airline connects to the popular cities of India including New Delhi, Pune, Mumbai, Kochi, Lucknow, Kolkata, Guwahati and Bengaluru. Its international destinations include Singapore, Dubai and Bangkok. Among the popular domestic routes, Vistara offers direct flights from New Delhi to Lucknow, Mumbai to Kochi, New Delhi to Guwahati, Pune to Mumbai, Kolkata to Guwahati, Pune to Kochi and New Delhi to Guwahati. There are international routes covered by Vistara are New Delhi to Singapore, Mumbai to Dubai, Pune to Bangkok, Kochi to Dubai and New Delhi to Dubai.

The business class comes with all the luxurious facilities for the discerning traveller. Spacious reclining seats with headrest, leg rest and footrest are provided. In this class, alcoholic beverages are served in the international Vistara flights. In both domestic and international flights, you can select from the curated dining menu in the business class. The premium economy class also provides a comfortable journey. This class comes with a 33-inch seat pitch with a fine seat cushion and adjustable headrest. This class also has a curated dining menu. You can also keep updated onboard with the best newspapers. The economy class is also very comfortable. It offers you free delicious meals along with non-alcoholic drinks. This class comes with a 30-inch seat pitch with an adjustable headrest. It also provides the Vistara World, the entertainment system. This is free and you can watch movies and listen to music.

Soon, it will go away. Every rupee counts," says Phee Teik Yeoh, CEO, of the newly-launched carrier Vistara, pointing a finger to the light panel attached to the ceiling. Yeoh, who along with his team of over 100 people shifted to a new office in Gurgaon on March 2, was referring to one of the ways in which he can cut costs.

For any domestic airline, nearly 70 per cent of the costs are fixed, which includes aviation turbine fuel (ATF) expenses, landing and parking charges, and leasing cost. It has to manage the remaining 30 per cent well to stay profitable. But it is not just better cost management that will decide the long-term future of Vistara, a full-service carrier, in the Indian aviation market.

Vistara is the third full-service carrier in India. It plans to offer a superior product, including a premium economy class - an emerging segment globally. It can succeed if it manages to scale up fast while continuing to command premium over its competition. Its journey will be fraught with challenges on both operational and cost sides, and cracking the full-service model will not be easy in a market like India where airlines come to die. So what lies ahead for Vistara? If it has to succeed, it will have to find a way to differentiate itself in what is becoming a commoditised market; it will have to keep costs in control in an industry where operational costs spiral out of control; and flying abroad could be a game changer as and when it happens.

Yeoh says one can choose to perpetuate on historical statistics or do something to create demand. "Ever wondered why the proportion of business traffic is so low? Many business travellers are forced to travel in economy [class] because there is a lack of choice and offerings. The aviation market is at the cusp of change," he says.

The business class demand is cyclical. It is directly linked to economic conditions as more than 60 per cent of the aviation demand is estimated to be generated by the corporate sector whose annual travel budgets are linked to business sentiment. People in India do not usually travel by business class for leisure. Many companies had cut down on air travel and enhanced their video-conferencing facilities after the 2008 economic slowdown. The CEOs then were setting a personal example of austerity by travelling economy class. But with the situation improving, more companies are willing to loosen their purse strings. Vistara hopes the business class will grow if the economy expands. But there's always a downside, to which Chief Commercial Officer Giam Ming Toh says, "Every business works on certain assumptions. If some parts of those assumptions do not materialise, we have to make adjustments."

Toh says a significant majority of the airline's traffic will be business- oriented. "Not just big companies, but also people who run their own businesses. As companies get bigger, they will have more executive level staff to fly business class."

To be successful, Vistara needs to have a cost base that is closer to LCCs, and a premium front-end. The steps to keep its cost base low were taken early on. When the two parents - Tata Sons and Singapore Airlines (SIA) - signed a pact in September 2013, a business plan was made. Some of the things were decided in the plan - for instance, to make Delhi a hub because it has low ATF prices and a less congested airport compared to other metros. In Delhi, a kilolitre of ATF costs Rs 50,363 versus Rs 51,704 in Mumbai, Rs 59,479 in Kolkata and Rs 55,346 in Chennai.

Also, the Vistara management knew that airport charges will be reviewed after 2014 and expected new charges to be lower. In February, the Airports Economic Regulatory Authority (AERA) proposed a 78.4 per cent cut in airport charges for Delhi. Fuel costs account for 45-50 per cent of an airline's cost whereas airport cost is less than 10 per cent.

Then, at the planning stage, a huge emphasis was given on costs and reducing the time to get things ready. For instance, one of the first things it did was to send out a request for proposal documents for aircraft because manufacturers take some time after the orders are placed. It went to both Boeing and Airbus. The India market is predominantly A320s and 737s. While Jet Airways and SpiceJet use 737s, the other major carriers fly A320s. Airbus met its requirements, including finding a leasing company - BOC Aviation, a Bank of China subsidiary - that gave a package of 20 aircraft spaced over three to four years delivery schedule. "Airbus met our requirements better and they were also competitive in pricing," says Toh.

Also, the airline decided to go for simple leasing instead of the sale-and-lease-back model, which many domestic carriers follow. The airline is controlling other non-customer facing expenses as well, including outsourcing services such as airport handling, IT, engineering maintenance and line maintenance. Most airlines outsource only heavy maintenance whereas line maintenance covers daily checks and handling of spare parts. "It saves capital and minimise cost," says Kapil Kaul, CEO (South Asia), CAPA.

So far, it has kept the manpower lean. With total staff strength of over 400 and five planes, the plane-to-employee ratio is about 80, which is lower than the ideal ratio of 90. "We also leveraged on Singapore Airlines' expertise to get competitive contracts in areas of engineering maintenance and aircraft leasing," says Yeoh.

Unlike its competitors, Vistara's office has a look and feel of a start-up. Nobody in the senior management - not even Yeoh - has a cubicle or cabin. Interestingly, the airline started out from Vivanta (a Taj Hotels brand) in Gurgaon, and has shifted twice in 15 months to accommodate its growing workforce.

Vistara aims to command premium on its differentiated product offering. In fact, it claims to have pioneered a new concept in Indian aviation by introducing the "premium economy" class. The idea is to cater to people who cannot afford business class - or even people who can afford business class but find it too expensive - but also do not enjoy economy class services. Several attempts have been made in the past by various carriers to address the growing demand of premium economy. In 2010, Jet Airways, through its low-cost brand Jet Konnect, had introduced semi-business class on select routes. Last year, Air India converted its first two rows of the all-economy A320 aircraft operating on Delhi-Guwahati-Imphal into a premium economy class. The middle seats between aisle and window in these two rows are not sold. Later, SpiceJet also came out with 30 premium economy seats in the first five rows of its Boeing 737. Vistara says it is the only airline to offer exclusivity to premium economy passenger by having a separate cabin. Other airlines don't have special cabins. "Our premium economy is not just about two more inches of legroom," says Toh.

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