Vistara will focus on growth in Southeast Asia and the Middle East this year, Chief Executive Officer Leslie Thng told reporters in Singapore after its maiden offshore flight touched down at Changi airport at about 8 a.m. on Wednesday. The company plans to have a fleet of 41 by the end of this year, and increase it to as many as 70 by 2023, Thng said.
Vistara, 49% owned by Singapore Air and 51% by Indian conglomerate Tata Group, started out in January 2015. India doesn’t allow foreign airlines to fly between local airports, unless they partner with a local company to start a domestic airline.
The carrier operates 30 Airbus SE and Boeing Co. jets and has a local market share of 5%, the smallest among six major players. It also plans to fly to Dubai and Bangkok. According to the CAPA Centre for Aviation, Vistara could break even in the year ending March 2020.
Vistara is a key element of Singapore Airlines’ multi-hub strategy, and the launch of international operations offers additional opportunities to it, a spokesman for the Southeast Asian carrier said. He declined to comment on competition. A representative for Vistara referred queries to Singapore Airlines, while Emirates declined to comment.
Still, airlines from the Middle East have history on their side. They’ve traditionally flown westbound Indians to Dubai and Abu Dhabi on ultra-cheap fares, before putting them on a flight to Europe or North America. Emirates, often dubbed the “unofficial national carrier of India,” controlled almost 15% of the market to and from India last year, regulatory data compiled by Bloomberg showed.
The fares offered by low-cost airlines in India’s notoriously price-sensitive market are another challenge for Singapore Air. A Vistara flight to Singapore from New Delhi on Aug. 28 costs 17,379 rupees ($245), according to online travel agent Makemytrip.com. In comparison, AirAsia Bhd. was offering a flight at less than half that price, at 7,745 rupees, albeit with a stop in Kuala Lumpur.
Suspension of flights by full-service rival Jet Airways India Ltd. has helped discount carriers gain market share in the country, but demand for premium product should still grow, CEO Thng said. Vistara is trying to take advantage of a gap in the market created by Jet’s demise, he said.