Vistara to fast-track aircraft induction; plans to seek funds from partners

Tata Sons-Singapore Airlines’ airline JV Vistara will fast-track the process of acquiring more aircraft and will soon approach the promoters to raise funds for international operations.

It had earlier planned to get 20 aircraft by June 2018, but with the National Civil Aviation Policy being unveiled recently, it plans to hasten the entire process.

“We are now chalking out a long-term strategic plan and will present the same to our promoters to raise funds for international operations and domestic growth,” Vistara CEO Phee Teik Yeoh told BusinessLine in an e-mail interview.

He said the airline will need to infuse more funds to prepare for its international operations.

The airline was founded in 2013 and the JV partners had committed to invest a total of $100 million in the venture. Singapore Airlines has 49 per cent stake in the company, while Tata Sons holds the rest.

Phee Teik said the airline earlier had an indicative plan for international operations, but now was the time to fine-tune it in light of the current market situation and some other variables such as lead time required for overall preparations. 

At present, the airline has 11 aircraft in its fleet and as per its initial plan, it planned to induct two more aircraft by end of this year and 20 aircraft (including A320 neos) by June 2018.

“Now with the announcement of the policy, we do not rule out accelerating the deliveries or procuring more aircraft from leasing firms / OEMs,” the Vistara CEO said.

He, however, did not say whether Singapore Airlines plans to increase its stake in the airline, following the Government decision to allow 100 per cent in FDI in the airline sector.

The airline’s Chief Executive also made it clear that the airline will fly overseas only when it is ready with improved products and services that are relevant to the international passengers and will provide connectivity from Singapore Airlines.

The airline has also made extensive changes in the cabin configuration after conducting a market study. The new aircraft seating configuration consists of eight business/ 24 Premium Economy/ 126 economy class.

“It better aligns with market needs and is allowing us to serve other emerging routes through better alignment of capacity to demand whilst satisfying the route dispersal guidelines,” he said.

The airline is looking at regional connectivity following the sops that the new aviation policy provides. Phee Teik said the revised RDG (route disbursal guidelines), a one-size-fits all approach, is detrimental to the overall growth of the industry.

“We are in support of regional connectivity and in favour of minimum commitment on Cat 2/2A routes. But for capacity deployment on Cat 1 and Cat 3 routes, the airlines should ideally be allowed to take decisions,” he said.

Vistara’s CEO also said there should have been concrete proposals on reduction of cost of doing business such as airport charges and ATF.

These are some of the areas, he said, which needs to see continued action to lower the cost of doing business.

The airline CEO, however, said that while Vistara’s growth plans were always independent of the 5/20 norm, it would have ideally wanted a complete abolition of 5/20 rule as that would have enabled Indian aviation to achieve its full potential.

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