Five years into its slow aviation journey, the Tata group’s joint ventures are still far from being counted as the major players in the market. Vistara and AirAsia India together have cobbled together just 9.5 percent share of the domestic skies in the first quarter of this calendar year.
This was lower than low-cost carrier SpiceJet’s 13.5 percent, even though it was flying fewer aircraft— 13 of its Max planes were grounded following a safety scare— and a whisker ahead of Go Air’s 8.9 percent.
Slow start
The two Tata airlines together account for a less-than-impressive piece of India’s fast-expanding aviation pie. In AirAsia’s case, some blame is derived from an unstable high deck. The first CEO, Mittu Chandilya, abruptly left the airline in 2016. Two years later, his successor Amar Abrol quit, returning to the Air Asia Group’s headquarters in Malaysia. Vistara, too, had turbulent initial years. There’s additionally the fact that the Tatas haven’t been aggressive on growth.
AirAsia features a comparatively small fleet of solely twenty-one aircraft, while Vistara has 22 planes.“They aren’t creating a lot of inventory, compared to rivals, as it may boomerang later,” said Ashish Nainan, an aviation analyst at CARE Ratings. The organized growth has, however, resulted in a healthy topline. “Since 2016, Vistara’s revenues have doubled every year. It’s been able to hamper losses, which indicates their fares are strategically placed,” Nainan said. “They don’t have to sell tickets at huge discounts.” AirAsia India, too, reported a near doubling of revenue in the financial year 2018.
Now, given the void created in Indian aviation by the grounding of Jet Airways, the Tatas might have found an opportune moment to expand market share still.
Coming On Track
Last month, Vistara has leased six additional aircraft from BOC Aviation to gain a bigger and better domestic footprint as quoted by the company. Additionally, four Boeing 737-800 aircraft and two Airbus A320neo planes are too scheduled for delivery later this year. The airline is also increasing its headcount by recruiting around 500 employees of Jet.
Promoters Tata Sons and Singapore Airlines have already infused over Rs 4,000 crore into the airline in the 12 months to April, to fund the expansion.
Vistara additionally plans to work on international flights soon; it received the government’s nod for this in March. Its loyal base of business category travelers may additionally prove useful as it launches international operations. Meanwhile, AirAsia India plans to double its fleet within the next fifteen months. The Bengaluru-based airline additionally plans to launch international operations by Oct, once it receives the requisite approvals.
Analysts say the Tatas are attempting separate business models with the 2 airlines. “While AirAsia shows the way to leverage the affordable carrier model, with Vistara they’re eyeing the European market,” aforesaid Nainan. “In the near future, it’s noticeably attainable for Vistara to set a competition with airlines like Emirates.”
In the current scenario when Jet Airways has already been grounded, the recent measures by Tata Group can promise fruitful returns. What do you think? Do tell us in the comments.
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