You are here: Home » Companies » News
Business Standard

Singapore Air picks crucial fight against Emirates for Indian skies

Vistara, 49% owned by Singapore Air and 51% by Indian conglomerate Tata Group, started out in January 2015

Anurag Kotoky Manish Modi & Kyunghee Park | Bloomberg 

Vistara airlines
Vistara Airlines

Ltd. just picked a fight with in a grab for India’s international travelers, and a slice of one of the world’s fastest-growing aviation markets.

Singapore Air’s unprofitable Indian venture Vistara completed its first overseas flight -- between New Delhi and Singapore -- on Wednesday. It’s the start of an uphill battle against Middle East airline giants, led by and Etihad Airways PJSC, that dominate India’s offshore routes.

For Singapore Air, ambushed all over Southeast Asia by budget airlines, the prize is clear. The number of passengers in India will more than triple to 520 million by 2037, the International Air Transport Association says. And of the 63 million people that flew to and from the country last year, two thirds were carried by foreign airlines.

Vistara will focus on growth in Southeast Asia and the Middle East this year, Chief Executive Officer Leslie Thng told reporters in Singapore after its maiden offshore flight touched down at Changi airport at about 8 a.m. on Wednesday. The company plans to have a fleet of 41 by the end of this year, and increase it to as many as 70 by 2023, Thng said.

Vistara, 49% owned by Singapore Air and 51% by Indian conglomerate Tata Group, started out in January 2015. India doesn’t allow foreign airlines to fly between local airports, unless they partner with a local company to start a domestic airline.

The carrier operates 30 Airbus SE and Boeing Co. jets and has a local market share of 5%, the smallest among six major players. It also plans to fly to Dubai and Bangkok. According to the CAPA Centre for Aviation, Vistara could break even in the year ending March 2020.

‘National Carrier’

Vistara is a key element of Singapore Airlines’ multi-hub strategy, and the launch of international operations offers additional opportunities to it, a spokesman for the Southeast Asian carrier said. He declined to comment on competition. A representative for Vistara referred queries to Singapore Airlines, while declined to comment.

Still, airlines from the Middle East have history on their side. They’ve traditionally flown westbound Indians to Dubai and Abu Dhabi on ultra-cheap fares, before putting them on a flight to Europe or North America. Emirates, often dubbed the “unofficial national carrier of India,” controlled almost 15% of the market to and from India last year, regulatory data compiled by Bloomberg showed.

The fares offered by low-cost airlines in India’s notoriously price-sensitive market are another challenge for Singapore Air. A Vistara flight to Singapore from New Delhi on Aug. 28 costs 17,379 rupees ($245), according to online travel agent Makemytrip.com. In comparison, AirAsia Bhd. was offering a flight at less than half that price, at 7,745 rupees, albeit with a stop in Kuala Lumpur.

Suspension of flights by full-service rival Jet Airways India Ltd. has helped discount carriers gain market share in the country, but demand for premium product should still grow, CEO Thng said. Vistara is trying to take advantage of a gap in the market created by Jet’s demise, he said.

First Published: Wed, August 07 2019. 23:11 IST
RECOMMENDED FOR YOU