New Delhi based Vistara is turning its focus towards international routes as the airline believes its domestic services are well-covered, with 31 destinations in India.
“In India we are operating in a quite good way. Now we are looking into international expansion. That’s why we have started with Frankfurt, Paris and London,” Vistara CEO Vinod Thandali Kannan told me recently on the sidelines of IATA’s recent annual general meeting.
International Expansion
The CEO explained in our wide-ranging conversation, that the airline’s first priority is to increase frequencies on existing European routes, as well to open services to Japan and South Korea. “In the Middle East we fly to Dubai and Jeddah, for example,” Kannan said. He did not rule out flights to the U.S. in the long-term future.
However, delivery of its four remaining Boeing 787-9s on order is limiting Vistara’s expansion plan. “We are waiting for when Boeing gives them to us,” Kannan said.
“The 787s are late, and this affects the growth plan quite a bit. We should have received them in 2020, and then in 2021.”
Vistara CEO Vinod Thandali Kannan
Fleet Operation
Vistara currently operates 51 aircraft, including two 787-9s. “On the narrowbody side, we operate mostly Airbus A320neos and A321neos. Our last five Boeing 737-800s, formerly Jet Airways aircraft, will leave the fleet in the next 6-12 months,” Kannan said.
By the end of 2023, Vistara plans to operate 70 aircraft, including all of the remaining incoming 787s. “There is no magic number in terms operating a minimum size of fleet. It depends on your business model. But you need scale,” Kannan said.
The A321XLR would offer new opportunities, he said. “When we get A321XLRs, we will be looking beyond the Gulf region, like to Eastern Europe, as well Hong Kong,” the CEO said. “The aircraft will give a lot of options.”
Plans for operations to Moscow have been postponed.
Vistara is a full-service carrier that began operations in 2015. It has 257 daily departures, including 76 from New Delhi, 50 from Mumbai and about 25 from Bangalore.
Kannan said Vistara has not looked to join one of the global alliances. “We have a lot of bilateral agreements where we have codeshares with British Airlines, Japan Airlines, Lufthansa, Singapore Airlines and United Airlines.”
Indian Market
Vistara is 51% owned by the Tata Group and 49% by Singapore Airlines (SIA). They are joint owners and work together to decide how Vistara fits with Air India now that Tata also has invested in the Indian flag carrier.
Asked whether Tata plans to bring Vistara and Air India together, Kannan said they are looking into it, but Singapore Airlines also will have to decide if such a deal would be possible.
“The market in India is growing. Our load factors are in the mid 80% level, a bit lower than before COVID,” he explained. But the Indian market potential is huge.
“Only 5-10% of the Indian population has flown. And people who have flown will fly again,”
Vistara CEO Vinod Thandali Kannan
Kannan said there is business in India for everyone, but there are a lot of price sensitivities in the domestic market as 80% of it is served by LCCs. “But we also have seen that people don’t mind spending a bit more because we offer more space. We also offer a premium-economy class,” Kannan noted.
The infrastructure for airlines in India remains challenging. Fuel prices have risen, and taxation is quite high, affecting Vistara´s domestic operations, Kannan said. “Some of these costs you can manage with the customers. But we are facing the challenge that our revenues are mostly in Indian rupees, but our costs are in U.S. dollars,” the CEO said. “We are the best airline in India. It was easy getting there, but maintaining that level is a problem. We established a good brand, and we see very good support on European flights.”