Investment in Vistara has worked wonders for us: Singapore Airlines

Investment in Vistara has helped Singapore Airlines (SIA) reaped benefits in India. Vistara is a joint venture between Tata Sons and SIA, in which the Singapore-based carrier holds 49 per cent. “The partnership with Vistara has proved mutually beneficial for SIA and Vistara. It has allowed us to get traffic from areas where we don’t fly to,” said David Lim, general manager, India, at SIA. Last month, the promoters infused another Rs 2 billion into Vistara, taking the total infusion from 2015 onwards to about Rs 15 billion. Total infusion includes a start-up capital of Rs 6.2 billion, followed by tranches of Rs 1.5 billion and Rs 2.5 billion in 2016. Vistara, however, has registered losses of Rs 4 billion and Rs 5 billion in FY16 and FY17, respectively. With losses in successive years, the airline’s net worth is negative by Rs 10 billion. Lim highlighted that the importance of Indian market was growing for SIA, with the number of outbound tourists growing. Singapore gets one of the highest numbers of tourists from India, which is behind China and Indonesia. The India-Singapore outbound market has grown by 16 per cent in 2017, compared with last year. SAI, however, has not been able to take much advantage of the growth due to constraints of bilateral flying rights.

Due to the constraint, SIA and its sister concern, SilkAir, together are able to increase only 10 flights for the summer schedule to 104 from 94 weekly flights now. The growth will mainly come from secondary cities like Coimbatore, Trivandrum and Vizag, where SIA will increase frequency. Six of the top eight routes for SIA are to Indian metros — Bengaluru, Chennai, Delhi, Hyderabad, Kolkata and Mumbai — where it has almost utilised its seat entitlements. Other than this, SIA has open sky (no seat restriction) to 18 destinations. “We have constraints of bilateral and airport slots in metros. We have open skies restrictions to 18 destinations in India but flights are launched considering not only availability but also viability, there are discussions ongoing between both the governments,” Lim said, when asked about expansion. In such a scenario, Vistara provides passenger feed to SIA from metros due to the code-share partnership and also gives access to cities where SIA doesn’t fly. Code-share is a commercial partnership between the airlines, where passengers of one carrier get transferred to the other during transits. “No doubt Vistara has increased our reach, we get their passenger due to the code-share and, in turn, those passengers have more options for their onward journey due to SIA’s wide choice of offerings,” Lim said. Vistara’s global foray, slated to start in June, will increase the benefits, Lim said. Singapore is likely to be one of the first destinations for the airline.