Why is Vistara Airline more preferable in India? What are its effects?
The Indian carriers have begun to seriously consider the foreign market even as the domestic aviation sector remains sluggish. Early in November, IndiGo and Qatar Airways signed their second codeshare deal (following Turkish Airlines), and late in the month, SpiceJet and Emirates signed their first-ever codeshare. Then, in early December, German airline Lufthansa and full-service carrier (FSC) Vistara inked their sixth codeshare arrangement. The Tata-Singapore Airlines JV carrier has negotiated comparable contracts during the past few years with parent Singapore Airlines, SilkAir, British Airways, Japan Airlines, United Airlines, and over a dozen interline contracts with other international carriers.
While IndiGo and SpiceJet recently announced their intentions to operate foreign long-haul flights, Vistara has been open about their goals from the beginning. The airline with its headquarters in Gurgaon had to wait till it had 20 aircraft in its fleet—a requirement set by the government to fly internationally—before it could begin operating its first international flight to Singapore in August of this year.
In general, entering into a codeshare agreement is the first step in flying long-haul international routes, especially for airlines like Vistara, IndiGo, and SpiceJet that have not yet entered that market. To be fair, all of these airlines have been operating independently outside of India for a long time, albeit on short-haul flights that primarily serve the Gulf and South Asian regions. However, long-haul flights are a very different animal.
When IndiGo, a low-cost carrier (LCC), explicitly declared (in July 2017) that it was interested in purchasing the foreign business of struggling Air India, its long-haul ambitions came to light (AI). Later, IndiGo decided not to participate in the AI’s sale process. Since then, IndiGo has remained certain that including wide-bodies in its fleet is more of a “aspirational” goal. For a while now, the airline has been submitting applications for slots in the London region. According to recent reports, it has also been given to Vistara users at the London Gatwick airport. Unless IndiGo has secret intentions to introduce wide-body aircraft, it’s unclear how it will be able to fly directly to that airport without one.
SpiceJet, on the other hand, placed an order for 100 Boeing 737-MAX aircraft in January 2017 with the option to upgrade 50 of them to wide-body aircraft (similar to the 787 Dreamliner) in order to launch low-cost service to Birmingham in the UK.
Since neither IndiGo nor SpiceJet has wide-bodies to fly as far as the UK, their plans to establish direct flights have not yet materialised. Even though IndiGo just ordered 300 A320neo family aircraft, some of which are longer-range A321XLR models, it still lacks (or won’t have any time soon) aircraft that can travel to Western Europe, particularly to the London area.
Vistara vs Indigo/Spicejet
On the other hand, Vistara is hard at work negotiating agreements to progressively increase its international presence with the aid of partner airlines, which will eventually give it the confidence to fly long-distance on its own. Vistara is the only airline of the three to have bought wide-bodies, six Boeing 787-9 Dreamliners, of which two are expected to arrive by March 2019.
“Codeshare arrangements are the ideal means of expanding worldwide for a small airline like Vistara. As IndiGo and SpiceJet continue to formulate their long-haul strategy, they appear to be in the lead “As a result of its size and scope, says an aviation specialist, Vistara would start by enabling foreign partner carriers to use their codes on its flights. “Similar to Gulf carriers that have partnered with IndiGo and SpiceJet, these foreign carriers would have access to Vistara’s extensive network in India. However, as Vistara creates international routes, such as, say, a flight from Delhi to London, it will probably use these (codeshare) arrangements to place its code on partner airlines’ flights, such as those to North America “he says.
Bolts and nuts
According to rumours, IndiGo and SpiceJet are organising one-stop flights to Europe and other destinations. While IndiGo’s intentions are yet a carefully considered assumption, SpiceJet’s are now public knowledge. As part of a partnership with the RAK international airport to promote its airport as an aviation centre, the Ajay Singh-controlled SpiceJet said last month that it will establish a joint venture airline in Ras Al Khaimah (RAK), one of the seven emirates in the UAE, along with a local partner. Early in 2020, the LCC is scheduled to begin flying to RAK, and having a base there will increase the likelihood that it can access the big European market.
According to reports, IndiGo is also considering setting up a hub in Eurasia to improve connections to Europe. One-stop trips imply that they could fly to Europe with their current narrow-bodies. Given that wide-bodies are a challenging game, that makes reasonable. They significantly increase operational complexity for airlines and are very expensive. Wide-body aircraft would require a different group of pilots, crew, engineers, and maintenance personnel. Additionally, the wide-body routes need at least a year, if not longer, to settle. Airlines must be ready to incur costs for the first few years before seeing a return on their investment. There is also always a chance of failure. After failing in its first two attempts to create a flight between Mumbai and London, Virgin Atlantic recently launched a third attempt. According to Richard Branson, the creator of Virgin Group, the service was restarted due to the market’s phenomenal expansion in Mumbai and reduced capacity.
After Jet was grounded in April of this year, the long-haul segment’s activity accelerated. Jet, which had flights to Amsterdam, Hong Kong, and London and was strong in the long-haul market, left a void that gave domestic and international carriers the chance to gain market share.
Once more, Vistara appears to have an advantage over rivals. How? The fleets of IndiGo and SpiceJet have a greater range of aircraft. For instance, IndiGo operates Airbus A320s (ceo and neo), A321neo, and ATR 72-600 aircraft. A321XLRs will be included at some point in the future. it is Airbus 320s, Boeing 737-800NGs, and soon-to-be-inducted Boeing 787-9 Dreamliners are among Vistara’s aircraft types. A streamlined fleet typically gives an airline a cost and flexibility advantage—two crucial factors in the long-haul game.
Currently, Vistara offers three class configurations on its aircraft, including premium economy, giving clients who are ready to pay a little bit more for better services an additional option. Air India and international carriers are the only options left to the FSC after Jet was grounded. Although the idea of low-cost long-haul (LCLH) appeals to a money-conscious Indian market, it would be too hazardous for Indian airlines to go that way given that the model is experiencing difficulties globally – the pioneer of LCLH Norwegian Air is incurring enormous losses.
The fact that Vistara has a more robust loyalty programme than SpiceJet works in its favour. Wide-body operations demand frequent flier programmes. IndiGo, which has thus far prioritised upholding its core values over winning over repeat customers, is undoubtedly lacking in this area. It might join one of the international alliances in the future.
What awaits us in the future?
Boeing has agreed to deliver six 787-9 Dreamliners to Vistara, with an option for four more, in the near future. In an interview with Outlook, Vistara CEO Leslie Thng stated that the company intends to employ the new 787s to fly medium- to long-haul flights from hub cities Delhi and Mumbai to Europe and possibly North Asia. By citing Vistara’s numerous codeshare partners, he continued, “Vistara’s ambition is to become the go-to airline for Indians to fly direct non-stop wherever in the world, including the US and Australia.”
Many people seem to have fallen in love with Vistara, as seen by the glowing internet evaluations that highlight the airline’s superior offerings. With a market share of barely 6% and a little boost following Jet Airways’ demise, there are still some problems for the airline. Vistara’s business strategy and path to profitability have come under scrutiny.