Posted by C C ASHOKA Wed, April 18, 2018 10:13:54
Vistara is likely to place an order for wide-bodied aircraft in the next few weeks as part of its plans to expand to long-haul overseas routes, people aware of the deliberations at the premium domestic carrier told ET.
Although they did not specify the maker of the planes or the number likely to be ordered, the development signifies that Tata Sons, which runs the airline in a joint venture with Singapore Airlines, is pressing ahead with its plans for Vistara even as it remains undecided on whether to invest in Air India.
The airline currently operates a fleet of 20 narrow-bodied Airbus A320 planes of about 180 seats. Wide-bodied planes typically have more than 300 seats, twin engines and a longer range of more than eight hours.
“Vistara plans to induct wide-bodied planes irrespective of whether the Air India deal happens,” said one of the persons, who did not wish to be identified. Spokespersons at Vistara could not be reached for comment.
The airline’s salt-to-software conglomerate parent is said to be interested in bidding for Air India, which has been put on the block by the government. One of the advantages is the national carrier’s international operations.
Experts have said that it makes sense for the Tatas to systematically merge Air India at least operationally with Vistara if the deal fructifies. The Tatas also run a no-frills carrier, in a joint venture with Malaysia’s Air Asia.
But a final decision from the Tatas hangs in a limbo as it is not enthused by the current terms of the bid — taking over majority of Air India’s debt and workforce; keeping it at arm’s length from other businesses, which rules out a merger of operations with an existing carrier; and conceding almost a quarter shareholding to the government.
“Singapore Airlines is an extremely focused carrier,” said Mark Martin, founder of Martin Consulting. “It didn’t get into an understanding to set up an Indian airline keeping in mind a chance investment (in Air India). It has always had its long-term plans and those stand.”
Tata Sons and several interested bidders are in talks with the government seeking changes to some of the bid conditions that they think are not conducive to investment, according to people in the know.
Vistara’s plans for bigger planes and longer flights were first reported by ET in 2016, in an interview with the airline’s former CEO Phee Teik Yeoh, who spoke about potential long-term plans of starting direct flights to UK and US. Leslie Thng replaced Yeoh as CEO in October last year.
He has said that Vistara plans to start with short-haul international operations to neighbouring destinations in the second half of 2018. He hasn’t elaborated on the airline’s long-haul plans.
In January, ET reported that Vistara had plans to launch flights to Tehran first and then Singapore, citing a proposal to the aviation ministry. Separately, ET reported that Vistara and Singapore Airlines were working on an anti-trust immunity agreement which would help Vistara synergise operations with its parent through cross accessing of inventory and schedules.
If Vistara places an order for wide-bodied aircraft, it will be the first such order from India since 2009, when Jet Airways had placed orders for Boeing 787 Dreamliners. Meanwhile, IndiGoNSE -0.02 %, India’s biggest a irline by market share, is charting its own plans of fresh orders for wide-bodied planes for planned operations to Europe and has reportedly selected the A330neo.
Although IndiGo too had expressed interest in investing in Air India, it opted out on April 6, saying it was interested only in the state-owned carrier’s international operations and did not have the capability to turn around all of the national carrier’s domestic business.
may opt for the Airbus A330neo (list priced between $254.8 million and $290.6
million), the A350 ($275 million-$311 million) or the Boeing 787 Dreamliner
($225 million-$306 million). The actual deal prices will be considerably
discounted depending on the volume of the order.