Vistara Airlines is offering its passengers to pick higher fares for Premium services.
- In this highly price-sensitive Indian aviation market, Vistara airlines, a full-service carrier possess the support of local conglomerate Tata Sons and Singapore Airlines Ltd. It is betting that it can convince passengers to buy higher fares in return for a superior service. Though all the airlines in India are feeling the Heat – with debt-levied Air India and Jet Airways struggling enough to pay staff salaries on time – Vistara conveys its upmarket strategy is commencing to bear some fruit.
The carrier has shrunk its LOSSes & apparently seen average fare boom this year as customers opt to its product offers, including the domestic premium economy class”.
- While ticket prices of most rivals are falling, Vistara CEO Leslie Thng told in an interview. “We are seeing a steady improvement in terms of demand, load factor & the fare that passengers are willing to pay,” said Thng. He is a Singapore Airlines veteran whose prior obligation was running the Southeast Asian regional arm, Silkair.
- India’s domestic airline market is growing rapidly at 20% a year, representing a long-term opportunity for Tata and Singapore Airlines. But in the shorter term, it has transformed into a financial sinkhole –
- High oil prices
2. Weaker currency
Both of them is not being recouped in fare prices, thereby driving the carriers into the red alert.
Vistara commenced flying in 2015 and now has 22 Airbus SE A320 narrowbody jets and a 4 percent domestic market share. It is struggling financially as it scales up. It is narrowing its losses to Rs 431 crore in the financial year ending March 31 from Rs 518 crore last year. According to accounts filling with the corporate regulator this month, it still is facing tougher market conditions this year.
DIRECTION TO PROFITABILITY
- Economic airline IndiGo is the Indian market leader with a 43 percent market share. However, it is adding capacity rapidly to protect its dominant position even though fares fell almost 10 percent in the quarter ended Sept. 30.
Vistara is mostly focusing on Acquiring a premium ticket price to cover the costs of perks like food, checked baggage allowance, and a frequent flyer programme.
- Vistara views a path to eventual profitability via plans to launch international flights as soon as it obtains regulatory approvals. Moreover, it will more than triple its fleet over the next five years. So that to give it a much bigger share of the Indian market.
A major strategy shift is to acquire some of its fleet rather than leasing all of it. Vistara Airlines will own 19 jets worth a combined $3.1 billion ordering from Boeing Co and Airbus earlier this year. However, it will lease another 37, underscoring its growth plans and strong financial backing from its top shareholders. “This is a strategic market and it is a market where Vistara will continuously grow and be profitable,” he conveyed.
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