Marketing Article
Vistara fireworks to light up the Indian night sky
The Tata Sons are all set to fire on all cylinders in the aviation industry come this September. In fact the Tata Sons under the dynamic leadership of their new Chairman Cyrus Palonji Mistry have been bracing up for an entry into the Indian aviation industry since the last year. To this effect the salt to steel conglomerate had also announced its entry into two strategic alliances for aviation. The name is derived from the Sanskrit word, which means limitless expanse "and draws inspiration from the brand's domain - the limitless sky". The airline by the Tata Group and Singapore International Airlines is targeting an October Launch. The commencement of operations is subject to the Directorate General of Civil Aviation's (DGCA) approval, which is examining the airline's application for an air operator's permit. The airline plans to start operations with an Airbus 320 aircraft and add 20 aircraft during the first five years of operations. This will, however, change once the government abolishes the five-year 20 aircraft minimum flying eligibility norm for international flying.
Recently it was reported that the Directorate General of Civil Aviation (DGCA) has asked the upcoming Tata-SIA JV carrier to ensure that its operational staff is present at all regulatory meetings to avoid delay in launching operation. DGCA deputy director Ved Prakash wrote a letter to Yeoh after an internal report said that the upcoming airline's operational team did not come for some meetings. Fearing that any delay in clearing an airline as prestigious as Tata-SIA may be criticized, DGCA took the unusual step of asking the JV partners to step on the gas. "You are advised to make available key post holders in India for interaction during the ongoing documents evaluation phase in order to complete the same. Non availability of key post holders may delay the certification process," the DGCA letter to Phee Teik Yeoh said. Confirming the receipt of this letter, a Tata SIA spokesperson said: "This is part of our ongoing engagement with the DGCA and we are complying with all their requirements."
To begin with, Vistara will look at metro cities to offer its service. Tata-SIA executives are gung-ho about the prospects of a full-service airline in India, though they did not reveal the fare and network details. "We are close to finalising the network," says Phee Teik Yeoh, CEO of TSAL, adding that the number of India's airline seats per capita at 0.07 is much lower than Australia's 3.35. Mukund Rajan, Brand Custodian and Member of the Group Executive Council at Tata Sons, cites a report from consultancy Centre for Asia Pacific Aviation (CAPA) which states that India will become the third-largest aviation market in the world by 2020. He adds that India's domestic air passenger traffic is expected to grow from 60 million per annum last year to 175 million a year by 2021.
Prasad Menon, Chairman of TSAL, says that Tata Group had made several attempts to enter the aviation sector over the past 20 years, each time with Singapore Airlines, but its attempts did not fructify. "The Tata group never gave up. We withstood the disappointments," he says. Tata Sons holds a 51 per cent stake in TSAL while the remaining 49 per cent is owned by Singapore Airlines. Two months ago, the Tata Group launched a low-cost airline - Air Asia India - in a joint venture with Malaysian airline AirAsia. Rajan says that both brands - AirAsia India and Vistara -- will operate in different segments and will not compete with each other. A full-service airline at a time when Indian carriers are making losses has generated mixed responses from industry experts. "In a market where most airlines are bleeding, the management has not given details on cost efficiency aspects and pricing strategy. More clarity is needed on how the airline will achieve profitability," says an aviation analyst. CAPA recently forecasted Indian carriers to post combined losses of $1.3 billion to $1.4 billion in 2014/15, slightly lower than the $1.7 billion loss reported last year. In July, the Jet Airways-Etihad alliance showed a roadmap to turn around the loss-making Indian carrier through cost cuts, debt restructuring and route sharing with new partner Etihad.