India's newest airline announced on Monday (Aug 11) flights could begin as early as October, saying it was "bullish" about the future even as a rival carrier reported a big loss.
The new airline, to be called Vistara - a Sanskrit word meaning "limitless expanse" - is 49 percent-owned by Singapore Airlines, while the Mumbai-based Tata conglomerate controls 51 percent.
The airline will offer both business and economy class, new chief executive Phee Teik Yeoh told reporters in New Delhi, and hoped to start flying passengers "sometime in October", subject to approval by India's Directorate General of Civil Aviation (DGCA).
The previous Congress government began allowing foreign airlines to buy up to 49 percent stakes in Indian carriers in 2012. India's air passenger market has expanded at breakneck speed but many companies are laden with debts and beset by cut-throat fare wars, high fuel costs and shoddy infrastructure.
India's second-biggest carrier by passengers, Jet Airways, reported on Monday it lost 2.2 billion rupees (US$36 million) in the three months to June 30. The figure was down from the 3.55 billion-rupee loss Jet reported in the same quarter a year ago after it cut financing costs, but the performance underscored entrenched problems facing the sector.
The Centre for Asia Pacific Aviation consultancy estimates the industry will lose US$1.3-1.4 billion in the financial year to March 2015 after losing US$1.7 billion in 2013-14.
IndiGo, India's largest passenger carrier, is the sole airline among the four biggest currently operating to consistently report profits. Kingfisher, another full-service airline owned by liquor tycoon Vijay Mallya, was grounded by huge losses in 2012.
But Vistara's new chief executive projected a strong future for the new carrier thanks to India's fast-growing middle class. "The Indian aviation sector is on the cusp of change," he said, saying the company was "very bullish about the future" thanks to low air-travel penetration in the country of 1.25 billion.
Air trips per person each year in India stand at just 0.07, far behind developed countries such as the United States with 2.49 air trips annually.
Vistara will take delivery of its first plane, an Airbus A320-200, in September, and will have five aircraft by December. It plans to increase its fleet to 20 by the end of its fifth year in business.
The Tata Group, which launched India's first civilian airline - later nationalised - announced its partnership with Singapore Airlines 11 months ago. Tata also holds a stake in an Indian low-cost carrier which started flying in June, operated by Asia's biggest budget airline AirAsia.
Tata said it believed there would be no conflict in holding stakes in two Indian airlines. "AirAsia is a low-cost carrier, Vistara is a full-service carrier - they are in different spaces," said Tata Group spokesman Mukund Rajan.
Dr Rajan, member of the Group Executive Council and Brand Custodian at Tata Sons, and director at TATA SIA Airlines Limited (TSAL), said: “All of us at Tata are extremely pleased to have witnessed the coming together of all the elements that have led to the realisation of Vistara, a long cherished dream for the group that pioneered civil aviation in the country.”
Commenting on the significance of SIA operating in India along with Tata, Mr Swee Wah Mak, executive vice-president commercial at SIA, and director at TSAL, said: “From a global investor’s perspective, the Indian aviation sector has a lot of potential for growth and I am delighted that SIA now has a fruitful role to play here.”
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