Tata Sons, SIA infuse Rs 500 cr in Vistara

Airline expands board with two new appointments

Tata Sons and Singapore Airlines (SIA) have invested Rs 500 crore in their joint venture airline Vistara. This is part of the Rs 600-crore funding commitment the partners had announced in 2013.

The latest round of funding (of Rs 200 crore) and fresh allotment of shares to the promoters took place in August. In the same month, the airline also appointed Som Mittal, former president of Nasscom, and Sangeeta Pendurkar, managing director of Kellog India, as independent directors on the board.

The airline now has a five-member board led by Chairperson Prasad Menon, former managing director of Tata Chemicals. An airline spokesperson confirmed the developments and said SIA Chief Executive Goh Choon Phong and Tata Sons Chairman Cyrus Mistry had met in Mumbai last month. “It was a regular courtesy meeting between the two,” the spokesperson said.

Vistara launched in January and now services 10 destinations. Next month, it will add Bhubaneswar to its network.

While the airline is expanding its domestic footprint, it is also pushing the government to relax the 5/20 norms, which restricted new airlines to fly abroad till they complete five years of operation and have 20 aircraft.

Vistara’s growth and future funding requirement would hinge on how soon the government changes these rules, but so far it has been unable to take a decision because of pressure from Air India and other private airlines.

“Vistara is sufficiently funded to manage operations in the initial phase. We will review our plans as and when required. Our fleet expansion plan also stays as per our strategy. We will be inducting three more aircraft to our existing fleet of six by the end of the calendar year and have a fleet size of 20 by 2018,” Vistara spokesperson said. 

Since January, the airline has flown half a million passengers and now operates 245 daily flights. While its punctuality record is over 90 per cent, its flight occupancy is just about 60 per cent, far lower than that of rivals. The airline, however, claims passenger volumes are increasing and it is attracting repeat passengers.

“Our highest priority is to deliver service excellence, while keeping our operational costs low. Our steadfast focus on our strategy is helping us gain customer confidence and sustainable growth. The outstanding customer feedback that we have been receiving and the repeat customer graph is a testimony to that belief,” the spokesperson added.