A year-old Vistara shows growth, but below expectations

Tata-SIA joint venture airline Vistara, which will complete one year of operations tomorrow may have grown its fleet size to nine aircraft from three at the time of commencement of services, its passenger load factor and yields have been below expectations.
The third full-service domestic carrier after Air India and Jet Airways, Vistara had launched its services on January 9 last year with a flight to Mumbai from here.
Today, it operates 307 weekly flights to 12 destinations with a fleet of nine Airbus A320s.
According to the India head of the Sydney-based aviation think-tank Centre for Asia Pacific (CAPA), Kapil Kaul, while Vistara's operational preparedness has been on expected lines, the passenger seat factor and yields have been surprisingly below expectations.

Vistara has, however, in its one year of service delivered growth (with a 9-aircraft fleet now) with reliability and schedule integrity, Kaul added.
The airline has plans to expand to its fleet to 20 aircraft by 2018.

The airline has flown a total of 9.08 lakh passengers between January-November last year and breached the one lakh passenger mark in a month, when it ferried 1.23 lakh passenger in October, as per the Directorate General of Civil Aviation statistics.
Vistara has clocked an average seat factor of 66.92 per cent during this period, which means it has flown three out of every 10 seats in its aircraft empty.

Besides, the airline has cornered an average market share of one per cent in the past 12 months of operations with a highest of 1.7 per cent in October.
The lower than expected PLF and yields have impacted its financials too, Kaul said.
CAPA in its mid-year profitability review report for this fiscal, released in October last year, had pegged the combined losses of the two startup carriers-Vistara and AirAsia India-- at USD 80-90 million while revising downward the total losses of the domestic airlines industry to USD 500-550 million from USD 680-750 million projected earlier.
Vistara Chief Executive Phee Teik Yeoh, however, considers airline's flight in the past 12 months as "no less than extraordinary."

"Nine aircraft, 12 destinations, more than one million happy customers, an impeccable record in punctuality and high standards of service excellence - all in such a short span of time," Yeoh said.
Kaul said that CAPA sees next 12 months for the airline
as crucial and "it has to deliver a better business performance, otherwise it will impact strategic direction."
While the government is yet to put in place the proposed national civil aviation policy, which would also take call on the existing 5/20 norm (five years, 20 aircraft) for international operations by domestic carriers, Kaul sounded hopeful of Vistara hitting the overseas skies in one year time.

Vistara could be operating international in the next 12 months, he said.
Vistara can't fly on overseas routes at present as the norm allows an Indian airline to travel abroad only when it has flown five year domestically while maintaining a fleet of no less than 20 aircraft.
Significantly, Vistara is from day one of its launch along with another startup AirAsia India are lobbying for scrapping of the 5/20 norm, while the established players under the banner of Federation of Indian Airlines are against the removal.