'Discussions on Vistara-Air India future on, expecting clarity in few months'
‘For Vistara, in terms of capacity, we were already at our pre- Covid level in November last year and currently we are 25% more than our pre-Covid level’
Vistara, a joint venture between Tata Sons (51%) Singapore Airlines (49%) carried 1.01 million passengers and became the second largest airline by market share (10.4%) in July. Ever since the Tata group acquired Air India, there’s been talk of a possible merger of the two airlines and Vinod Kanan, chief executive officer (CEO) of Vistara, said in an interview that there will be clarity on this in a few months. Edited excerpts:
According to recent reports, domestic passenger numbers are 7% short compared to pre-Covid level. Are you expecting traffic to return to pre-pandemic levels by December?
In the last few months, passenger traffic had reduced as July to September is a lean period for all airlines. However, I expect that by the end of this year, we should reach pre-Covid levels, or at least the peaks that we used to hit on a season-to-season basis. Demand is still strong, corporate travel perhaps has not come back to pre-Covid level but visiting friends and relatives and leisure have started improved significantly. For Vistara, in terms of capacity, we were already at our pre- Covid level in November last year and currently we are 25% more than our pre-Covid level.
When do you see International passenger traffic coming to pre-Covid levels?
International sector is more complicated, but we are almost back to the capacity that we used to deploy, with some reductions . But the international airlines’ capacity has not come back to the same extent. My expectation, however, is that by April- May 2023 even international travel should catch up with pre Covid- levels.
What is your expansion plan? How many new flights will Vistara add in its winter schedule?
Currently, we operate 250 flights every day across our network (international and domestic), out of which, the majority of the flights are in the domestic sector. In winter, we will increase our flights from the current 250 flights per day to around 280 flights, in stages. We have already increased our departures from Mumbai from 38 daily flights to 50 . We have 55 aircraft as on date, these include 43 A320s, two B787, five each A321s and B737s.
In the winter schedule starting from October end, we will add more flights to Europe. I expect a 10-15% increase in flight operations through the winter months. We are increasing capacity to Frankfurt and Paris. We will also be adding one B787 aircraft, taking the total of B787 aircraft to three. We will be taking delivery of narrow body aircraft, both A320 and A321s which will be deployed in both domestic and international sectors. By the end of this financial year, our fleet size will increase from the current 55 to 60. We will start deploying these aircraft, as and when they are delivered.
There has been talk of an Air India and Vistara merger; what is the status of this?
All possibilities are being discussed. Since we are a joint venture, the two shareholders will have to discuss a road-map for the future . Whether it’s going to be a merger, or we will have two separate airlines are all options that are still on the table . To be sure, the discussions have begun and according to me, we should have a clarity on this in the next few months.
According to recent reports, Air India, Air India Express and AirAsia India will soon start working from the same office? what about Vistara?
We recently shifted to a new office in 2021. I am not ruling out the possibility but it all depends on future decisions.
Air India recently announced an expansion of its fleet. How are you going to leverage that?
Air India and Vistara are still independent entities until a decision is made on how they will work together). We do not have any code share with Air India but we have started working on those lines by having the ‘flight interruption agreement’ (that allows the two airlines to offer first available alternative flights in case of a disruption, to lessen passenger inconvenience). However, if this leads to a commercial agreement such as a codeshare or an interline agreement (something that allows passengers to book connecting flights across two airlines) will probably be the next step, which we have not started discussing.
Has the removal of fare caps by the government affected the airlines?
Fare caps were introduced for a certain reason of protecting passengers ; airlines are also in the situation where they are fighting for demand . A free market is always most beneficial to the customers and also promotes competition. Passenger traffic is not high due to the lean season in September. The real test would be from October to December, as more demand and constant capacity usually leads to fare hikes.
So far you have not have not been able to turn profitable.
It has been a tough time for all airlines over the last three years. On the revenue front, ever since Covid-19 relented, except the third wave, demand and revenue is back and our share of the market has grown. We are doing very well from the unit revenue perspective. At the end of the day, the biggest issue in aviation is that the cost is not in our control be it fuel cost or foreign exchange. If we were at the same levels as we were last year (on these two), all airlines would be making money.
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