Wednesday, January 06, 2016

After a slow start, Vistara revs up for growth

Vistara, completing its first year of operation this week, is seeing a positive outcome from tweaks to its network and the introduction of incentive pay to agents. The measures helped the airline to clock load factor of 72 per cent in November, its best ever since its launch in January.

Vistara, a joint venture of Tata Sons and Singapore Airlines, was launched on January 9 last year. The two promoters have infused Rs 600 crore in the airline according to the original funding plan.

Vistara added two flights on the Delhi-Mumbai route increasing frequency to eight daily services in December. The extra flights gives Vistara a better opportunity to compete effectively on the busiest domestic route. While it lacks fleet size and network of its peers,  Vistara is focusing on the Delhi-Mumbai route for growth.

It has also added flights between Delhi and Goa and has withdrawn flights from the Mumbai-Ahmedabad route which did not attract enough passengers.

Corporate sales are increasing and business from Tata group companies is also growing. From October, the airline has begun offering two per cent incentive to agents discontinuing its zero commission policy and this has led to improved sales. Vistara also has a sales network overseas and the airline said growth in bookings from markets, including Dubai, Japan and Singapore has been encouraging.  The airline said it is looking to increase commercial tie-ups with foreign airlines and open sales channels in other markets.

In November, Vistara reported loads of 72 per cent the highest since its launch in January.  Vistara's average loads in the previous 10 months was 60 per cent, while the industry-wide loads in the same period were 82 per cent.  In contrast, SpiceJet has been reporting  passenger occupancy of over 90 per cent since May.

The poor occupancy in Vistara aircraft  has been blamed on the lack of network and good frequencies and its cabin configuration. It offers a three-class configuration (16 business class, 36 premium economy and 96 economy class seats). Other carriers in India either operate on a twin-class (business and economy) or an all-economy configuration.
05/01/16 Aneesh Phadnis/Business Standard
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