Vistara, AirAsia India seek to grow fleet quickly, fly overseas

SINGAPORE: Vistara and AirAsia India, airline ventures of India’s biggest conglomerate Tata Group, aim to boost their fleet sizes to 20 planes within a year and

SINGAPORE: Vistara and AirAsia India, airline ventures of India’s biggest conglomerate Tata Group, aim to boost their fleet sizes to 20 planes within a year and launch international services after the government overhauled aviation rules, two people familiar with their strategy said.

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The Narendra Modi-led NDA government on Wednesday revised its so-called ‘5/20’ policy, removing a restriction that domestic carriers need to have been operational for five years before they can fly abroad. They must, however, still deploy 20 aircraft or 20% of total fleet, whichever is higher, in India.

AirAsia India began operations in June 2014, and Vistara in January 2015. The two will prioritise services to the Persian Gulf and flights to Southeast Asia to connect with their investors Singapore Airlines and AirAsia, the sources, who declined to be identified, said.

Singapore Airlines has a 49% stake in full-service carrier Vistara, while Southeast Asian low-fare pioneer AirAsia owns 49% of budget airline AirAsia India. Tata Group has a 51% stake in Vistara and 49% in AirAsia India.

AirAsia India CEO Amar Abrol said on Wednesday that the airline will increase its fleet from six to 20 aircraft “as soon as possible”.

These will come from Malay­sia-headquartered AirAsia, which supplies Airbus A320s from its large orderbook to affiliates around Asia. AirAsia declined to comment for this report.

Vistara has 11 A320s and will get two more this year, and it originally planned to have 20 planes by June 2018. All of these are from leasing firms, and it will turn to them for more planes, a source said, adding wide body aircraft could also be on the cards, but not a priority.

Singapore Airlines referred questions to Vistara, which did not immediately respond to a request for comment.

Vistara has a three-class configuration, which executives believe can help it compete against Gulf carriers such as Emirates, Etihad and Qatar Airways, which dominate the market for travel to and from India.

International services by AirAsia India and Vistara may not significantly hurt incumbents such as Air India, Jet Airways and IndiGo, some analysts said.

“We don’t really see this as a negative for the competition because in today’s global environment, the airlines also need to compete with carriers from abroad and they do not just face the local competition alone,” said Pankaj Sharma, head of equities, Equirus Securities.