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Vistara

When the DGCA notified the public that TATA-SIA airlines, now operating under the brand name Vistara, had applied for an Air Operator Permit, the DGCA had made public the joint venture’s proposed route pattern, detailed below.

VISTARA-RDG

In the light of the temporary relaxation in meeting route dispersal guidelines handed to Vistara, The Flying Engineer analyses the proposed route pattern for year 1.

The proposed route pattern, as handed over to the DGCA during the application phase during April 2014, had listed Mumbai, Goa, Bangalore, Hyderabad, Ahmedabad, Srinagar, Jammu, Patna and Chandigarh as destinations – either non-stop or with one stop, from Delhi. Based on the weekly frequencies, we’ve computed the average daily frequency, and computed the capacity (in available seat kilometers – ASK) as per ICAO’s Air Transport Bureau (ATB) guidelines.

The proposed route pattern for one year generates enough capacity on CAT IIA, but generates a CAT II capacity that just meets or falls slightly short (0.18%) of meeting the capacity as stipulated by the existing (at the time of writing this piece)  Route Dispersal Guidelines (RDG) as laid down by the Ministry of Civil Aviation (MoCA), India. However, the airline, in its original proposed route pattern, could notwhere have met the required capacity on CAT III routes, as shown in the table on top.

The airline’s present pattern, which includes DEL-BOM vv, and DEL-AMD-BOM vv, does not conform with the original proposed pattern. The frequency on DEL-BOM nonstop is already 21 a week, each way. The DEL-AMD-BOM pattern, which was to have kicked in during the second year of operations, started on the second day of the airline’s operations.

A very smart move that Vistara may have made is to push its requirement to meet the RDG three months later, which is April 2015 onwards. This benefits Vistara in two ways:

  1. It allows the airline to make money in a lean season by flying on business routes which are not much affected by seasonal variations, while ramping up fleet and mainline network strength.
  2. It will allow the airline to deploy disproportionally high capacity on CAT II/IIA and CAT III routes (to compensate for the first three months of operation, starting January 9th 2015) during the summer (Q1 FY15-16 / Q2 CY15), when demand for travel is high, due to a holiday season.

With this strategy, the airline may be able to minimise its losses in Q4 FY’15 and perhaps maximise its revenues in Q1 FY’16.

Statistically, Bangalore ranks the third among all cities in India as far as domestic passenger movements are concerned. In FY13-14, Bangalore witnessed 10.2 million passenger movements, which is after Delhi (24.2 million) and Mumbai (21.9 million). Besides Tier I cities, Ahmedabad had the highest traffic, of 3.6 million passenger movements. Going by Vistara’s priority in tapping lucrative, proven markets, Bangalore may be either the next Tier I destination or simply the next destination after Delhi, Mumbai and Ahmedabad. Goa witnesses the third highest passenger movements among non-Tier I cities, and may also become the airline’s next Tier II destination (CAT III route). It will not be surprising to see Vistara choose Pune as another Tier II destination, soon. Pune had the second highest non- Tier I traffic after Ahmedabad, at 3.5 million movements.

The original pattern would have required an average of 51:40hrs of block time to be clocked, per day (which will vary on a daily basis based on non-daily flights). The actual daily block time would have been between 50:30hrs to 53:20hrs. Assuming a conservative 10hr aircraft utilisation – per day per aircraft, the airline will require 6 aircraft to fly the original proposed pattern. The airline already has two aircraft flying, and a third in Delhi. Two others are ready at Toulouse and will be delivered by March end (2015), taking the total to five. With one aircraft per 1.5 months expected post March 2015, Vistara may be able to fly its original planned network in May 2015, should it still hold. But considering that the airline may end 2016 with 13 Airbus A320-232SL aircraft, it is likely that Vistara will far outgrow its original proposed network, even with the backlog of RDG – mandated capacity that will have to be flown.

With this in mind, it may not be surprising to see Vistara expand its network to Guwahati, Kolkata, along with few other stations. The projected growth seems both achievable yet aggressive.

Network service and on time performance are important yet just two of many factors that influence people to choose an airline. Vistara is just one of three full service carriers in India, bringing with it a strong brand formed by established and well known players – Singapore Airlines and Tata Sons. This will attract the discerning traveller. Full service carriers play the yield game, generated largely by the first class in their aircraft – the business class. The airline has 16 business class seats on each of its aircraft.

However, the only product differences between a low cost carrier and the premium economy (36 seats) and economy sections (96 seats) of Vistara are the food, the renowned oriental style emphasis on service and higher pitch comfortable seats, as the airline offers no in flight entertainment options or support. How these two cabin sections of Vistara will compete with other airlines is to be seen. For example, for travel on February 15th between Mumbai and Delhi (based on a search at the time of writing this piece), airlines including Jet Airways charge as little as INR 3,000 one way, while Vistara holds its ground at 6,520 one way. Whether brand name will prevail in a generally cost sensitive market is to be seen. However, there is also an emerging trend amongst people with disposable income who look forward to enjoying their money.

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