Vistara CEO on fleet size, aircraft orders, delays and international expansion

Vistara will continue to expand and expects to have a total of 70 planes by mid-2024, its chief Vinod Kannan said on Tuesday, January 24. The airline, a joint venture between Tata Sons and Singapore Airlines, reported an operating profit for the first time since its inception in the three months that ended December 2022.

“The percentage of capacity deployed internationally has increased. We have 25-30% deployed internationally… That is quite positive and a game changer for us,” Kannan said at a briefing.

Vistara is set to be merged with Air India. By the middle of next year, Kannan said it will have a total of 70 aircraft, including 7 Boeing 787s. Out of the total 70 planes, there will also be 10 A321s and 53 A320 neos, the Vistara CEO said at a briefing. Among the 53 A320 neos, 10 planes will have all economy classes and the rest will have three classes. Currently, the airline has a fleet of 53 aircraft.

“We will continue to expand… more international routes (will be added),” Kannan said. According to him, there are constraints in terms of traffic rights and slots. “We would love to operate more flights to Dubai, Singapore but those are all constrained by traffic rights. We had to look at other options… we will be looking at more points in the Middle East,” he added.

Regarding the performance in the December quarter, Kannan said the operating environment for the last year itself and the last quarter has been quite strong when it comes to demand and average fare perspective. Also, the deployment of wide-body aircraft helped the airline.

“It was one of the strongest quarters (December quarter) we had from the revenue perspective, if you look at the overall revenue or whether you will look at from unit revenue. Strong demand which resulted in high load factor and that demand was not turned away due to high fares, (so), we were able to get a very strong revenue performance. The second aspect is that the US dollar and fuel prices have been on an increasing trend… We have some sort of scale, we have 53 aircraft. So, unit cost and deployment do reduce to a certain extent.

There is also the impact of the deployment of wide-body aircraft and currently Vistara has three such planes in its fleet. They have been doing extremely well and the demand in Europe has been strong. Flights have been flying with load factors of more than 85-90%. Therefore, that plays a positive role in the performance of the airline.”

Vinod Kannan, CEO, Vistara

Deepak Rajawat, the COO of Vistara, added that in the past year, the airline has added 30 new routes and seven destinations. “We have reworked our network, and created a second hub from Bombay, which has boosted our growth.”

Without disclosing the exact profit figure in the December quarter, the airline on Monday, January 23 said it crossed the USD 1 billion revenue mark and remained EBITDA positive in the current fiscal year. EBITDA refers to Earnings Before Interest, Taxes, Depreciation and Amortisation.

“For the first time since inception, the airline reported a net profit (excluding unrealised foreign currency loss and non-operating income) for the quarter ended December 2022,” Vistara said in a release.

Speaking about the current revenue mix, Kannan said that the airline currently generates 70% of its revenues from domestic travel and 30% from international travel. “We are waiting for the deliveries of aircraft because we know our true potential lies in long-haul travel, and that is where we have a competitive edge.”

Vistara halts aircraft orders ahead of merger, eyes international growth

Vistara will not place new plane orders while it awaits regulatory approval to merge with Air India but that will not stop the airline from adding more international routes to boost profits, its chief executive said

The full-service carrier, a joint venture between Singapore Airlines and India’s Tata Sons, will receive its pending order for 17 aircraft by the end of 2024, taking its total fleet to 70 planes.

“We have not looked at any orders beyond that. There has been the announcement about the merger and integration with Air India. Once we have approval from the relevant authorities … we will have to sit down together with Air India as a joint entity to see what we do,” he said.

But Vistara’s expansion will continue and the airline is “not going to scale back” because of the integration, he added.

Tata said in November it was merging its two full-service carriers – Air India and Vistara – to create a bigger airline to take on local rivals like IndiGo as well as Middle Eastern carriers that dominate outbound traffic from India.

Tata is also expected to announce a new plane order of some 495 aircraft for Air India, Reuters reported, as it looks to revamp the airline under its ownership.

Vistara, which started operations in 2015, recorded its first operational profit in the December quarter helped by strong travel demand and higher fares, despite surging fuel costs and a weak rupee versus the dollar. Kannan hopes to continue the momentum and flying to more international destinations is a key factor.

“International expansion will be a focus going forward. It plays a strong role in the performance of our bottom line,” he said, adding the airline was constrained in some markets like Dubai and Singapore due to unavailability of landing slots.

Vistara deploys up to 30% of its capacity on 12 international routes including cities in Europe, the Middle East and Southeast Asia. These routes contribute 30% of its revenue.

The airline has put on the backburner plans to launch flights to the United States due to delays in receiving deliveries of its Boeing 787 widebody planes. It will instead strengthen its presence in Europe where it currently flies with load factors – a measure of how full its planes are – of 85% to 90%, Kannan said.

Vistara shelves plan to fly to US on 787 delivery delays

Vistara has shelved plans to start direct flights to the US following disruptions in deliveries of Boeing Co.’s 787 Dreamliner aircraft.

“We were discussing US at one stage,” Vistara Chief Executive Officer Vinod Kannan said at a virtual press meet Tuesday. “We have had to put that on hold after the fact that 787s are going to be interspersed and not coming in at the same time.”

Vistara, a joint venture between the Tata Group and Singapore Air, is expecting to induct its remaining four Dreamliners by March 2024, he said. While the first of those four jets will be delivered by April, Vistara is waiting for clarity from Boeing on the exact delivery timeline, Kannan said.

Boeing got the green light from US regulators to restart deliveries of 787 jets in August. While the jetliner’s deliveries were largely paused in late 2020 after flaws were discovered, the concerns weren’t viewed as a safety hazard and airlines were allowed to continue operating their existing 787s.

Vistara will rejig its plans to operate routes that require only fewer aircraft such as London, Paris and Frankfurt, he said. The airline will add frequencies and connect those international destinations to other parts of India, perhaps Mumbai, he said.

Operating daily flights from India to the US is “resource consuming” and for Vistara, the staggered deliveries of 787 jets will create a “big gap” in the widebody aircraft it needs to fly to the destination, Kannan said. The airline currently has three 787 aircraft in its fleet and one of them is a used plane that is on lease for three years, he said.

Vistara, which broke even for the first time in the quarter through December, aided by the expansion of its international network, will be merging with Air India Ltd. as Tata plans to revamp its faltering aviation business. Air India’s top advantage among local carriers is that it operates non-stop flights to the US without having to transit in the Middle East.

(With Inputs from PTI, Reuters, Bloomberg)

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