India’s aviation market is notoriously challenging. High fuel taxes and airport fees drive up costs while cheap fares proliferate. Into this tumult comes a new player, Vistara, which aims to start flights in October in a country where airlines have tallied almost $10 billion in losses since 2007.
The main difference at Vistara? Premium service. One of the world’s highest-rated carriers, Singapore Airlines (SIA:SP), owns 49 percent in a joint venture with Tata Sons. Vistara will target business-class travelers, an arena where higher fares could help it overcome some of India’s expensive structural costs. It’s starting with five Airbus (AIR:FP) planes this year and plans to grow to 20 in coming years.
“We are confident we have what it takes to make a significant difference in this market, and we will be the finest full-service airline in India,” Vistara Chief Executive Officer Phee Teik Yeoh told Bloomberg Television.
Despite all the challenges, airlines remain keen to enter the Indian market because of the expected growth of international business and leisure travel over the next few decades. Vistara is likely to face new competition from Jet Airways (JETIN:IN), which aims to scrap its discount operations and revamp its fleet to focus on a premium-class product. The airline, partially owned by Etihad Airways, has not turned an annual profit since March 2008.
13/08/14 Justin Bachman/Bloomberg
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The main difference at Vistara? Premium service. One of the world’s highest-rated carriers, Singapore Airlines (SIA:SP), owns 49 percent in a joint venture with Tata Sons. Vistara will target business-class travelers, an arena where higher fares could help it overcome some of India’s expensive structural costs. It’s starting with five Airbus (AIR:FP) planes this year and plans to grow to 20 in coming years.
“We are confident we have what it takes to make a significant difference in this market, and we will be the finest full-service airline in India,” Vistara Chief Executive Officer Phee Teik Yeoh told Bloomberg Television.
Despite all the challenges, airlines remain keen to enter the Indian market because of the expected growth of international business and leisure travel over the next few decades. Vistara is likely to face new competition from Jet Airways (JETIN:IN), which aims to scrap its discount operations and revamp its fleet to focus on a premium-class product. The airline, partially owned by Etihad Airways, has not turned an annual profit since March 2008.
13/08/14 Justin Bachman/Bloomberg
