SIA's Indian JV finally takes flight

SINGAPORE - After two decades of trying to break into the Indian market, Singapore Airlines' (SIA) joint venture Vistara took to the skies on Friday with its inaugural flight from Delhi to Mumbai.

Vistara is also backed by Tata Sons, which owns a majority 51 per cent stake while SIA holds the balance.

The premium carrier, which will go head-to-head with Air India and Jet Airways, took off from Terminal 3 of Delhi's Indira Gandhi International Airport at 12.30pm on Friday.

The Delhi-based airline received its air operator permit (AOP) later than expected, prompting it to push its expected launch date from October last year.

Operating 148-seater Airbus A320-200 aircraft, Vistara offers 16 Business seats, 36 Premium Economy seats and 96 Economy seats.

Mahesh Sharma, India's Minister of State for Culture, Tourism and Civil Aviation, said: "Though India is projected to be the third largest aviation market globally by 2020, and the sector opening up to allow 49 per cent FDI will attract many new players, the focus will be on safety and quality, which is more important. Also, it is the Prime Minister's vision to develop India as a leading tourism hub, and connectivity is imperative to achieve this."

According to reports out of India, Vistara will operate 87 weekly flights to and from Delhi, and plans to bump this up to 300 flights in four years. It also announced previously that it will operate to Ahmedabad.

Meanwhile, SIA is no doubt hoping that India eases its 5/20 rule, which requires domestic airlines to operate for five years and grow to a fleet of 20 aircraft before they can tack on international routes to their network.

Goh Choon Phong, SIA's chief executive, said: "India's aviation market has been expanding rapidly and we have been eager to directly participate in and contribute towards this growth story for many years. We are confident that Vistara will help to stimulate market demand and provide economic benefits to India, and are committed to supporting Vistara to deliver on its brand promise to Indian travellers."

Two earlier attempts by SIA to enter India - both with Tata - were stymied by political opposition and lobbying from local carriers.

Although one of Asia's fastest-growing aviation markets, India is also one of the toughest to operate in, due to high fuel taxes and operating costs, insufficient infrastructure and stiff competition.

In fact, all Indian airlines, save for IndiGo, are in the red, while recent casualties include Kingfisher Airlines, which went belly-up. However, lower fuel prices and a pick-up in the Indian economy may also give Vistara the boost it needs.

Shares in SIA closed at S$12.16 on Friday, up 14 cents.

nishar@sph.com.sg

This article was first published on Jan 10, 2015.
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