Vistara hits airfare turbulence even before take-off

The Tata Group-Singapore Airlines joint venture Vistara, which starts its inaugural flight on January 9, will face stiff competition...

Mumbai | Published: January 2, 2015 12:51 pm

The Tata Group-Singapore Airlines joint venture Vistara, which starts its inaugural flight on January 9, will face stiff competition from peers like state-owned Air India and Jet Airways as the duo have offered lower fares during the month to passengers who booked tickets till December 31.

Since maximum bookings are made 7-10 days before the date of the journey, Vistara’s offering of R7,500 for a one-way economy class ticket on the New Delhi-Mumbai sector — two of the three destinations that it will initially fly to — on January 9 is considerably higher than that of Air India and Jet Airways, which are offering the same for as low as R6,500 and R6,200, respectively.

“Jet and Air India are offering tickets at 20-40% lower price point than Vistara on January 9, the day the airline takes off, on the Delhi-Mumbai route. Due to the discounts offered by competitors, bookings at Vistara are currently slightly slower than its full-service peers,” said Sharath Dhall, president of online travel agency

A Mumbai-based travel agent told FE that unlike Jet Airways and Air India, who approach travel agents to promote new routes launched by them, Vistara hasn’t gone the extra mile to promote its bookings, especially with brick and mortar travel agencies, which still contribute to a significant portion of flight bookings.

FE couldn’t confirm this information with Vistara.

Vistara, which starts operations with two 148-seater Airbus A320 aircraft operating on three sectors — Delhi-Mumbai, Delhi-Ahmedabad and Ahmedabad-Mumbai — aims to have five aircraft in its fleet by March and a 20-aircraft fleet in the next four years. The airline already has 400 people on its rolls, and hopes to add wide-body aircraft for long-haul international routes after government regulations permit it to do so.

The airline also aims to be different in many ways to make itself more attractive to passengers who fly on full-service carriers. It will have a three-class configuration — economy, premium economy and business — that will come with personalised check-in services through tablets, a meal menu that changes every week and a frequent-flier programme where points can be collected on ticket spends rather than miles travelled.

However, experts have a word of caution for Vistara, especially on its three-class configuration, the first of its kind among domestic airlines in the country. “There is definitely a scope for three-class cabin configuration in the domestic sector as we have seen international airlines like Virgin and Cathay Pacific use the segment very effectively to attract passengers. However, for Vistara to succeed with its premium economy class it has to get its pricing points right,” said an executive of an online travel portal.

“Indian passengers will pay 15-20% extra over what they pay for their economy class ticket to get an upgrade to premium economy segment. But if Vistara prices these seats at more than 20% over the price of its economy class seats, the airline may find it difficult to attract passengers to this segment,” the executive said.

Rhik Kundu

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