Vinod Kannan is Vistara's CCO and CEO designate.
Indian full-service carrier Vistara, a joint venture between Tata Sons and Singapore Airlines, began operating international routes in summer 2019 and now offers scheduled service to eight overseas destinations. CCO and CEO designate Vinod Kannan explains more about the airline’s network strategy and the current levels of demand in India.
How has Vistara adapted its operations since the onset of the pandemic?
The initial lockdowns early last year had major financial implications on our business. Restrictions on capacity deployment, prolonged suspension of scheduled international operations and muted demand are some of the key factors that affected the pace of our expansion. However, in the face of the adversity we remained flexible in our approach and focused on reducing our non-customer-facing operating expenditures, while exploring new avenues to supplement our earnings. To this end, we leveraged opportunities such as commercial cargo and charter flights in the peak of the pandemic and introduced several ancillary services in our effort to generate additional revenue.
Despite the ongoing challenges, we continue to stay firm on our long-term expansion plans. We see great potential for long-haul direct flights from India, and therefore we have been steadily growing our global network under travel bubble agreements. We have also launched multiple new domestic routes in India, operating at around 72.5% of our pre-COVID capacity within the country.
How difficult has it been to plan a network given the changing and disjointed travel restrictions in India and internationally?
Network planning has never been more dynamic than it is today. What used to be a monthly or seasonal exercise is now being revisited on a daily, or at best, a weekly basis. Planners cannot rely on previous schedules or historical data to develop new flight schedules given the changing regulations, requirements and demand patterns. Having said that, with the situation settling down the process of planning the network, too, seems to be stabilizing. We are also actively leveraging data analytics to gather key insights for scheduling, which is a significant help in the process.
What current levels of demand are you seeing, and in what segment of the market?
As the situation continues to stabilize gradually and ramped-up vaccination efforts boost passenger confidence, we observe a gradual recovery, mainly in the VFR and leisure travel segments. Our load factors oscillate between 70% and 75% now, indicating a gradual return of demand. This is also the onset of the festive season in India, so we expect a stronger recovery in the next few months. In light of the growing demand, the cap on domestic capacity was also recently revised from 72.5% to 85% of pre-COVID capacity, and we are gradually increasing our capacity as per the demand for air travel.
Your international plans have been delayed by the pandemic, but Vistara has nevertheless opened several new routes. Can you tell us more about your long-haul expansion and future plans?
Since the start of the pandemic, we have expanded our network with seven new international destinations, including London Heathrow, Dhaka, Dubai, Doha, Frankfurt, Sharjah, Malé and Tokyo, as well as restarting operations to Dubai. In addition, we will be operating special nonstop flights between Delhi and Paris Charles de Gaulle starting Nov. 7, 2021. We have also operated charter flights to many other international destinations, such as Hong Kong and Seoul. These services have not only helped us to introduce Vistara in markets that were already part of our expansion plans, but also helped us to make inroads into new geographies, paving the way for a strong foothold for the brand in global aviation.
The momentum we have gained in the last year on our international expansion has been rewarding. Having received a temporary Foreign Air Carrier permit from the US Department of Transportation (DOT), we are hopeful to start long-haul operations to the US in the coming months. We continue to monitor the market and evaluate more opportunities from the standpoints of commercial viability and feasibility. We have plans in place to add 10-12 destinations to our network as soon as we can.
Once you have received full US DOT approval, when can we expect Vistara’s first services to the US? What routes are you evaluating?
We are in the process of applying and getting permissions to operate flights to the US and it would be premature to talk about the routes or the timelines for our operations. The start of services to the US would depend on a host of factors and we are trying our best to make it happen at the earliest.
Given the existing competition from Gulf carriers on India-Europe/North America routes, coupled with a renewed focus on India from US airlines, how do you intend to take share from the more established operators?
Vistara fills a void in the market as a modern Indian airline with a brand-new fleet offering a world-class travel experience. Also, in the present-day scenario, travelers are increasingly displaying stronger preference for nonstop direct connectivity to avoid contracting the coronavirus in transit and due to the complexities involved regarding travel restrictions and quarantine rules.
We believe that Vistara is uniquely positioned with a clear competitive edge in the market. In terms of our product and service attributes, we believe that we are at par with most well-established global carriers, offering the experience of our brand-new Boeing 787-9 aircraft that come with many passenger-centric features. The product is well-complemented by the onboard service delivered by our cabin crew that have been trained to the exacting standards of Tata and Singapore Airlines.
Are you considering any partnerships with any other international carriers to help feed your proposed long-haul services?
We continue to partner with like-minded airline brands from across the world to provide our customers an extended worldwide network. At present, we have partnerships with over 30 airlines, including codeshare pacts with British Airways, Lufthansa, Japan Airlines, Singapore Airlines and United Airlines. These codeshare partnerships were established long before we started services to London, Frankfurt or Tokyo, as these destinations were part of our global expansion plans from the beginning. We will continue with this approach as we move forward in our vision of becoming a globally renowned airline.
What are your fleet delivery plans?
In the 2020 calendar year we added two new 787-9, two Airbus A321neo and four Airbus A320neo aircraft to our fleet, while five of our old Airbus A320ceo aircraft were returned to the lessors. We remain committed to the overall orders we had placed with both the manufacturers and are working out the delivery schedules of aircraft. We are on track to have a 70 aircraft-strong fleet in the next two years.
Photo credits: Vistara