As UK115 took to the skies on August 6, it marked the maiden foray of Vistara – the Tata-SIA joint venture — into the international markets. The flight connected its hub New Delhi with Singapore – the hub of its equity partner Singapore Airlines.

That the airline will launch flights to Singapore as its maiden destination to get traffic and feed traffic to its equity partner was predictable. However, things were not as simple as they seemed. Jet Airways kept up the pressure and added frequencies from across the country to create a mini hub at Singapore, leaving any other airline with limited seats to launch flights and wait for the amendment to Air Services Agreement.

As fate would have it, Jet Airways shut operations in April, and Vistara decided to take up the B737s which flew with Jet Airways, along with the crew and it was this very B737 which is helping them start flights to Singapore – since its current A320s would complete the mission with load penalty, unlike the High Gross Weight (HGW) Boeing B737s currently operating the flights to Singapore from New Delhi and Mumbai.

The airline had not shied away from letting the market know that it has international ambitions. Speeding up the delivery to induct the mandatory 20 aircraft earlier than planned and placing order for a mix of A321 and B787-9, were all preparations for its international foray while it awaited a formal nod from the government.

Time to fly international

As the government went around with distribution of bilateral rights which were available after the suspension of Jet Airways, Vistara got seats / frequencies to Bangkok, Singapore and Dubai.

Call it by choice or the lack of it, the airline has launched its two flights to Singapore and would be followed by flights to Dubai from Mumbai (effective August 21) and to Bangkok from Delhi (effective August 27). The bilateral rights to these three destinations were either consumed or nearly saturated until a few months ago and had it not been for the suspension of Jet Airways, it would have been very difficult for Vistara to launch flights to any of these destinations. As the government along with the regulator doled out the seats or frequencies on international routes, the airline which had permissions in place to start international operations, quickly gobbled up whatever was on offer.

The presence in international markets will be skeletal to begin with. On all the routes that the airline would operate in its initial days, it will be the smallest carrier on the frequency side as well as capacity.

The markets and its traffic

In the short-haul international market, Dubai, Singapore, Bangkok and Hong Kong attract the maximum traffic from India. This involves a mix of business and leisure and thanks to the mix of locals and foreigners, the traffic is year around with a sizable business class demand. All of which tick off well for Vistara, to have three of these as inaugural phase routes.

There is near consensus that there is traffic on these routes and rightly so since these routes have not seen capacity increase for a while, even when domestic and international traffic from India has been growing at great speeds. However, the long-term goal of profitability will be under pressure for Vistara.

Hours prior to the airline launching international flights, Vistara announced an enhanced code-share with Singapore Airlines and Silk Air. This will mean that Singapore Airlines will place an SQ code on Vistara’s international flights and Vistara will codeshare with over 40 destinations in the Singapore Airlines and Silk Air network.

While this bodes well for the Singapore gateway, because the competition from Jet Airways does not exist and the low-cost carriers do not carry any onward traffic, the same will not be the case at Dubai and Bangkok.

Emirates operates five widebody flights between Mumbai and Dubai, followed by IndiGo, which flies four times a day between the two cities. With the capacity to play around fares and control the fares to Dubai and beyond, Emirates could well put pressure on pricing for Vistara from the higher end of the spectrum while IndiGo pushes to drop fares – thanks to the renewed capacity which it now holds. Vistara will operate just seven out of 110 weekly frequencies each way on the Mumbai – Dubai route.

To Bangkok, the airline will have seven weekly frequencies, while the total will be at 61 with competition from Thai Airways and a plethora of Indian carriers – Spicejet, Air India and Go Air. Due to the restrictions on its current A320s, the airline is operating the B737s to Singapore – where it could have made the most of the three-class product while the other two destinations see its flagship A320 being deployed.

The last factor which need not be missed is that of Air India. The national carrier is present in all these markets and while it may not have a product to match that of Vistara, the Star Alliance member has an unmatchable distribution channel in all these markets which help give a tough fight to any new entrant.

International operations are far more complex than in the domestic market. While the cost of operations is higher, diversions, disruptions, service quality, connections, all matter a lot. The current schedule of Vistara is not catering to connections at India end effectively. Until the airline adds red-eye departures or adds frequency to international destinations, this challenge will remain.

In any market, nobody welcomes the competition with open arms! And the airline needs no telling going by its journey so-far in Indian skies.

Ameya Joshi is the founder of aviation analysis blog NetworkThoughts.

Read Ameya Joshi's columns here

First Published:Aug 8, 2019 6:00 AM IST