Having inducted its 22nd aircraft on Saturday, Tata-Singapore Airlines’ Indian joint-venture Vistara plans to start its international operations later this year becoming the sixth carrier from the country to fly abroad. In a conversation here, Vistara’s CEO Leslie Thng told The Indian Express that India has a potential for becoming a hub for international travel and there was need to develop accordingly. He also spoke about the airline’s plans for the domestic market, where it looks to tap a market it was hitherto elusive of by offering a more cost-effective product. Edited excerpts:
Vistara has listed out a plan to begin flying international to destinations such as Sri Lanka, Maldives, Thailand and other neighbouring countries. For most of these, the billateral rights are fully occupied. Are you looking at other destinations beyond these?
First of all, we are planning to start international operations before the end of this year as I have said earlier. The process has been initiated before the DGCA and the Ministry of Civil Aviation. There are enough places where we could to. We are looking at places where rights are available. It is beyond this list. This is just a part of the initial plan. We have 22 aircraft at this moment and they will be required to fulfill domestic operations so we won’t be able to go to too many places internationally. As we induct more aircraft, we are looking at places where rights are available and when we are able to announce that you’ll get to know.
How do you plan to leverage your Singapore Airlines connection for your interanational plans?
Singapore Airlines is based in Southeast Asia. But even with the new aircraft that we are bringing in, our goal is not just to Southeast Asia. Our goal is to be a global airline, which means more than just Southeast Asia. We can look at Europe, the US. When we fly to Southeast Asia for example, Singapore Airline being a very strong airline there, would be able to give us cooperation in terms of giving us more opportunities to sell other destinations where Vistara wouldn’t be able to fly non-stop. If we fly to Europe, we will have to look for some other partners as well. And Singapore Airlines is not strong there.
In terms of Singapore Airlines possibly leveraging Vistara to connect to the West, what makes you think India could be a better international hub than the middle east?
India has a good potential for becoming a hub for international travel. The market where Indians are travelling is very small and that will grow in the next couple of years. If we don’t start developing a hub ourselves in terms of creating more non-stop and one-stop options to the destinations we are flying to, then the market share for all Indian carriers will continue to be relatively smaller than the foreign carriers.
Slots are a constraint domestically. How is Vistara managing that?
When you look at domestic operations, Delhi being our hub is the one that we will try to continue to grow. We also believe that there is enough travel demand within the country outside of Delhi because Delhi is constrained. If you look at how we have expanded in the last 6-8 months, we started operations from Chennai, from Bengaluru to other cities not linking back to Delhi. So, the growing travel demand from other metros is something Vistara could tap. However, the primary hub will remain Delhi, which is also from where we will base our international operations.
Being a full-service carrier, do you think the airline is well placed in terms of cost structure and branding to expand into the smaller towns of the country as well as the other airlines have?
We have been expanding in the tier-II and tier-III cities in the last 12-18 months or so. But of course, we do understand that in this market, the competitiveness as well as the market profile of these cities is very different from metros. But we are still a very young airline and very flexible and nimble. We will try to understand and see what the market really needs, and if there is a need, we will start offering different products. This is one of the reason why we came up with the Vistara Freedom Fare, to more effectively target a part of the market that we were not able to earlier because of our cost structure but that is a segment within a very big segment that we are targeting. But our business model will remain full-service. Even with the Vistara Freedom Fare, we are still majority of passengers who buy the standard product.
Does this imply that response to the new economy offering has not been that great?
There is a growing segment of customers who may want to travel on Vistara but may not want to pay that fare or may not want certain attributes that are packaged with the full service. It’s not that it hasn’t been great, it’s just that a majority of our passengers that we have been carrying in the last three years or so, they will still prefer the standard product. We feel that with the new product, we can tap the passengers that maybe Vistara had not been able to tap in the past, who prefered our competitors rather than us.
Has it helped bump up your occupancy levels?
Our occupancy is generally lower than low-cost carriers because of our three-class configuration. But in economy class, our occupancy is generally quite high for a full-service carrier. Of course there are routes that may not be performing up to our expectations. On these routes, we felt this product will be able to help us. For routes on which we already see strong demand, from a business point of view, we don’t need (this product).