Vistara will operate these aircraft between Tier B and Tier C cities, where there is less demand for premium class seating, said people aware of the plan. As of now, it will continue to serve on-board meals in all aircraft.
There is currently one such plane in Vistara’s fleet, in all-economy configuration. The airline acquired it from grounded Icelandic carrier WOW Air in the aftermath of Jet Airways shutdown, to take advantage of the resulting gap in capacity.
Said a Vistara spokesperson: “The all-economy aircraft tends to be deployed on routes with weaker demand for front cabins or on seasonal leisure routes. We may have a few such aircraft in the future to serve these routes.”
Adding: “However, aircraft configuration is not to be confused with the business model. Service delivered across our fleet will be full-service, regardless of the configuration.” Experts say the government’s route dispersal guidelines (RDG), making it mandatory for airlines to operate in loss-making regional routes, is a big reason why the airline has been forced into a hybrid strategy.
RDG divides domestic routes in three categories. Category-I represents the 20 most profitable ones, among metros. Category-II has the Northeastern region, Jammu & Kashmir, and Lakshadweep. Category-III represents metro to non-metro cities such as Coimbatore, Kochi or Varanasi. Airlines have to deploy on Category-II routes at least 10 per cent of what they have on Category-I routes. Likewise, they have to deploy on Category-III at least 35 per cent of their capacity on Category-I routes.
With ever-increasing cost of operations, airlines like Vistara find it taxing to fly the remoter routes, where business and premium economy cabins have little demand. The airline in the past has failed multiple times to comply with the norms, with rival airlines asking for regulatory action against it.
“RDG mandates a certain capacity on these routes. With all-economy on such routes, the airline will be able to satisfy the norms more easily, as seats will increase. With the same distance flown, it will be able to fly more capacity. Also, it is less pinching to fill economy seats by dropping fares in economy class, rather than business,” said Ameya Joshi, founder of aviation
Operating a hybrid fleet, warn airline executives, could pose operational challenges and also risk customer dissatisfaction.
“What happens when a business class aircraft is grounded and the airline is forced to operate an all-economy one on a route which had business class booking? It will risk complaints from customers who will be downgraded. Changes to the product will not be easy and will need to be supported by significant investment in information technology, branding, and repositioning,” said an executive of low-cost airline SpiceJet, which also faced difficulties in operating business class.
Joshi thinks different products can be operated. “India is a large and varied market. Airlines, as they grow in size, will have to adjust fleets to the needs of those particular markets,” he said.