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Around two years after the government made it easier for airlines to fly abroad, two Tata group airlines are preparing to start international operations. While Vistara, Tata group’s full-service carrier, will begin international flights in the second half of this year, its low-cost airline AirAsia India is likely to follow by the end of 2018.
According to the initial plans, both the airlines will try to take advantage of the strong markets of its parents Singapore Airlines and AirAsia Bhd. So, Vistara, a joint venture between the Tatas and Singapore Airlines, will initially start with Singapore and destinations in West Asia, while AirAsia India will feed into hubs such as Kuala Lumpur, where its parent Air Asia Bhd has a strong presence.
The government had relaxed the 5/20 rule, which mandated five years of domestic operations and 20 aircraft for an airline to fly abroad. While the condition of 20 aircraft stayed, the requirement of five years of domestic operations was waived. While it was heavily opposed by incumbents such as IndiGo, SpiceJet, and Jet Airways, Ratan Tata gave a public statement asking for the change.
According to Leslie Thng, chief executive officer (CEO), Vistara, the airline will initially start operations to the short-haul international destinations from Delhi and then scale up to middle-haul destinations within a nine-hour range. After consolidating its market, the airline will plan ultra long-haul destinations like the west coast of the US.
“Initially, we have taken a middle-term view of three years. By June, we will have 22 A320 planes and will start international operations from the second half of this year.
Initially, we will look at destinations which are in the four- to five-hour flying range of the A320,” he said.
Thng refused to comment on future destinations but indicated the airline plans to fly into well-established markets rather than virgin routes. According to senior officials in the civil aviation ministry, Vistara has already sought permission to start operations to places such as Abu Dhabi, Dubai and Singapore. Industry sources said the airline was looking at Airbus A330neo through which it would launch destinations in Far East Asia like Tokyo and Seoul. London is another probable destination. “I believe that Vistara will stand out among its competitors in the international market. For unchartered market, we will have to see if that makes financial sense,” Thng said.
Experts said Vistara’s gradual expansion made sense and it would look to increase its presence in long haul markets through partnerships before taking the plunge on its own. “India sees large origin-destination traffic to places like London, Singapore, Hong Kong. Vistara could have a strong presence there once it starts widebody operations,” said Ameya Joshi, founder of aviation blog Network Thoughts.
AirAsia India will try to feed into the extensive international network of AirAsia group, beginning with daily services to Kuala Lumpur and Bangkok from Bengaluru and Kolkata. Some of the routes that the airline has sought permission for are Bengaluru-Kuala Lumpur, Kolkata-Dhaka, Hyderabad-Kuala Lumpur.
“We are looking at end of 2018 or definitely by early 2019. Our group airlines have a meaningful presence in those two cities (Kuala Lumpur and Bangkok), all we need to do is to go and land there,” Amar Abrol, CEO of AirAsia India, said. The airline, which currently has 14 aircraft, plans to add at least eight annually for the next five years.
“The airline has a large network beyond Kuala Lumpur and Bangkok too and would definitely leverage those but availability of bilateral will be critical since existing players will also increase flights this year,” Joshi said.