TATA SIA names its new airline Vistara

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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Tata-SIA joint venture to get licence to fly in July: Report

An air operators' permit (AOP) is expected to be issued to the Tata-Singapore Airlines (SIA) joint venture in July and commercial operations are likely to start in September, according to India’s Financial Express newspaper.

In a report on Friday, the Financial Express cited a company official who said the Directorate General of Civil Aviation's audit process is now in "its final stage". With the last leg of approvals in place, the airline will announce its brand name early in August, and take flight in September, it said.

"We expect to get the AOP by July, and the planes (Airbus A320s) will start coming from August. In the first year of operations, we will have five aircraft, increasing it to 20 over the first four years," the official was quoted as saying.

Tata Sons has a 51 per cent stake in the joint venture, with SIA owning the rest. Company CEO Phee Teik Yeoh and commercial chief Toh Giam Ming, were both drafted from SIA to lead the joint venture, according to the report.

The likelihood of the joint venture getting off the ground appeared to be in doubt earlier this month, when a lobby group representing Indian carriers - the Federation of Indian Airlines - asked the Delhi's high court to quash the approval of the Tata-SIA collaboration. The court reportedly sought advice from the fledgling government led by Prime Minister Narendra Modi.

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AirAsia finally soars in India

 AirAsia India finally took off as the fourth low-cost carrier in the country on Thursday with its maiden flight from Bangalore to India’s smallest state, Goa.

Tickets for the airline's maiden flight were sold out within 10 minutes of opening for sale on May 30.

This development in itself has sent shock waves through the highly-competitive sector in India.

The 49:30:21 joint venture between AirAsia, Tata Sons and Telestra Tradeplace offered a fare as low as 990 rupees (US$16.70) for the flight.

Its 25,000 promotion seats were also taken up within 48 hours.

"Our motto has always been to make everyone fly. We have already begun to show that we are true to our promise," said Chief Executive Officer Mittu Chandilya in acknowledging the brisk sale of tickets.

To keep pace with the airline, others in the fray such as SpiceJet and IndiGo have come up with their own promotional fares.

In announcing the launch of four new flights on its domestic routes, Indigo also proclaimed fares of one rupee (two US cents) on the Bangalore, Chennai and Goa routes, taking on the competition from AirAsia India’s five-rupee fare (excluding airport tax and other applicable fees).

The other low cost carrier in India is GoAir.

Mittu had said the airline’s fare will be 35 per cent cheaper than others in the market.

According to the Director General of Civil Aviation, among the domestic carriers, including the full-services ones, IndiGo dominates the local market with a 31.6 per cent share, followed by Jet Airways-JetLite combined at 21.8 per cent in April.

Air India has an 18.3 per cent share, SpiceJet 17.9 per cent and GoAir 9.5 per cent.

Although no one has got the inside of AirAsia India’s game plan, it is an open secret that it won't be flying into crowded sectors, at least for now.

AirAsia India has placed its interest in second- and third-tier cities.

About 50 per cent of the traffic is in Mumbai and New Delhi combined, AirAsia’s Group Chief Executive Officer Tony Fernandes said when the airline was launched.

There are plenty of markets to be developed, he added, highlighting that AirAsia India’s presence will bring new connectivity, more frequency and redistribution of air traffic.

Other airlines furiously lobbied against AirAsia's entry, even after it secured the Air Operator Permit (AOP) last month. It also faced a court case filed by a political party leader objecting to the clearance given to the airline to start operations.

In his no-holds-barred style, Fernandes had lashed out many times over how vested interest was bogging down the Indian aviation industry.

The Indian aviation industry has a $12.6 billion debt and suffered $8.6 billion in cumulative losses.

Fernandes said he had never experienced a situation where an entire industry tried to block his airline.

"Some airlines are scared of us. We must be doing something right," he tweeted recently.

"Help us people of India. Don’t let cartels win and not let (the) ordinary man fly."

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Tata-SIA collaboration hits snag in India

 India's effort to liberalise its airline sector has just taken a stumble.

The birth of a joint venture between Tata Group and Singapore Airlines (SIA), which was approved last year, now hangs in the balance, because of protests from a key lobby group.

The Federation of Indian Airlines - a lobby group that represents leading local carriers - has asked Delhi's high court to quash the approval of the Tata-SIA collaboration.

Its argument is permitting foreign investment in greenfield airlines will jeopardise the interest of the "existing cash-starved domestic airlines".

The court is now seeking advice from the new government.

Sudip Bandopadhyay, managing director and CEO of Destimoney Securities Private Ltd, said: "I am very hopeful that I think the government will take a positive stance and probably give them approval to go ahead, but assuming there is a negative decision, I think it’ll hurt the sentiment to an extent.

“Here we are trying to welcome foreign investment, wanting foreign airlines to come and invest and if you don't let Singapore Airlines come… that will send a wrong signal out and I hope and pray that doesn't happen."

Higher operating costs are squeezing margins in India’s airline industry, and passenger traffic growth is weak.

In addition, its aviation safety ranking was knocked down this year.

The pressure is on for the government to turn around the sector.

Kannan Siva, executive vice president of operations at Aranca, said: "I think in order of priority, the first one would be really looking at the tax structure for aviation turbine fuel that's at a state level that needs to be rationalised or reduced.

“The second area that they would be looking at is reducing airport charges which are pretty hefty in India compared to rest of the world, and also airport taxes that passengers have to bear."

Experts said that the new pro-business government will hopefully boost growth and that will encourage people to spend on air travel.

With a stronger but friendlier regulatory regime, plus relaxation in taxes, Indian carriers could soon emerge from the current slowdown.

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New Singapore-Indian airline to get Airbus A320s

Singapore Airlines has decided to lease 20 Airbus A320s for the launch of its Indian carrier, a joint venture with the giant Tata Group, the new company confirmed on Thursday.

Singapore Airlines chose the A320s over Boeing's 737s and will source the 20 planes from leasing companies rather than buying direct from Airbus, a Tata SIA Airlines spokesman told AFP.

"It's going to be an Airbus A320 fleet. The aircraft will be on lease," spokesman Sanjay Singh said in an emailed statement.

Singh did not disclose the cost of the lease arrangements, which were sealed some 10 days ago, but media reports put the deal at US$1.8 billion.

The new airline will likely start flying around July after it gains regulatory approval in India, the spokesman said.

Indian tea-to-steel conglomerate Tata will hold a 51 per cent stake and Singapore Airlines Ltd 49 per cent in the new venture, announced in September, as they seek to exploit one of the world's fastest-growing aviation markets.

The airline, which will have an initial combined investment of US$100 million from the two stakeholders, marks the third foreign direct investment in the Indian sector since the government declared last year that international airlines could buy as much as 49 per cent of local carriers.

The Tata Group is setting up another airline venture in India with Malaysia-based budget carrier AirAsia, which is expected to start operations early this year.

In November, India's Jet Airways said it had completed the sale of a 24-per-cent stake to Abu Dhabi's Etihad.

India's aviation sector was once celebrated as a sign of the country's vibrant economy.

Its fortunes faded owing to a range of obstacles ranging from aggressive fare rivalry and rundown infrastructure to expensive fuel, but there is now renewed interest as investors eye the nation's vast aviation market and growing middle class.

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SIA expected to weather aviation industry challenges in 2014

Asia Pacific airlines are expected to post a profit of US$4.1 billion in 2014, and according to the International Air Transport Association (IATA), a slight reduction in jet fuel prices is a major driver of the improved outlook.

IATA said Asia Pacific airlines are expected to post a US$3.2 billion profit in 2013, which will be a third consecutive year of declining profits.

Still, when the US Federal Reserve tapering eventually happens, experts said it will likely affect liquidity in aviation circles in 2014.

However, they said Singapore Airlines (SIA), with its strong cashflow, should come out relatively unscathed.

SIA may have reported better operating profits this year in its fiscal second quarter in the financial year of 2013/2014, but with the encroachment of low-cost operators in the region and other competitors, it is expecting increased pressure on yields from more aggressive promotional activities.

In FY2013/2014, SIA reported a second-quarter (July to September) operating profit of S$97 million (US$78 million), up 15 per cent from S$84 million year-on-year.

But the Singapore national flag carrier is fighting back.

Its associate, Tigerair (in which SIA owns a 30 per cent stake), has announced a joint venture with Taiwan-based China Airlines.

And its mid-to-long-haul budget carrier Scoot said it will be setting up a new airline with Thailand's Nok Air. The Nok Air-Scoot venture has a registered capital of S$85 million.

Ellis Taylor, a reporter at Flightglobal, said: “Part of SIA's problem in the past is that they didn't want to embrace the low-cost phenomenon, and to his credit, Goh Choon Phong (SIA’s chief executive officer) has been very strong in pushing that agenda.

“They've managed to weather the storm quite well, so for them it's not a huge amount, they've got bigger amounts going into the Tata-SIA joint venture and SIA has the ability to draw on multiple funding sources so it won’t affect them too much."

In November, legacy carriers SIA and Garuda both upped their baggage allowance by 10kg across all classes.

Qantas upped theirs from 23kg to 30kg in March and Malaysia Airlines (MAS) did the same in July 2013.

Indeed, all eyes will also be on SIA's upcoming venture with the Tata group in India.

Paul Ng, global head of aviation at Stephenson Harwood, said: “ India has strict rules for all carriers in India -- to have at least had five years of domestic service before they're allowed to do long-haul or overseas business.

“So it will be interesting to see how Tata organises its business in terms of domestic market both with the Singapore Airlines joint venture and the AirAsia joint venture. "

Besides budget carriers and regional competitors, SIA has the Gulf players to contend with.

Greg Waldron, Asia managing editor at Flightglobal, said: “The Middle East carriers are arguably the most powerful force in the airline world today. They have a great deal of influence of design in the aircraft like the 777x, which was launched at the Dubai airshow, as well as the massive orders.

"These carriers will continue to put immense pressure on Asian carriers. The simple fact is that in the Middle East, you can connect so many points through one point in the Middle East with one stop, (which) makes them extremely challenging for other people to compete with. "

The Gulf carriers are flushed with cash -- something not all Asian carriers can boast of.

Despite a softer market in Europe and the US, analysts said SIA should be in a better position to weather the challenges confronting the aviation industry in the coming months.

The airline has taken steps to control its costs, including pilot redundancies, the divestment of the very expensive A340 aircraft and the cancellation of unprofitable business routes to Los Angeles.

Analysts said they expect to see more independent leasing companies helping to fund aircraft for second and third-tier carriers within Southeast Asia in 2014.

Shukor Yusof, an analyst at Standard & Poor's Capital IQ, said: “We think we will see more of that in 2014, as well as new forms of instruments, perhaps securitisation, perhaps more bond issues to fund this aircraft acquisition, more Islamic financing because of the potential rise in interest rates that we could expect to see in the first half of next year, so that's going to alter the profile of many airlines in the region who are typically short of cash.”

Players in Thailand's aviation market, however, seem undeterred with the likes of low-cost carriers like Thai Lion Air and Thai VietJet Air purchasing new planes and launching new routes from Bangkok‘s Don Mueang international airport into the region and beyond.

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SIA gets nod from India's FIPB for Tata Sons joint airline venture

Singapore Airlines said it has received approval from India's Foreign Investment Promotion Board (FIPB) to establish a joint venture airline in India with Tata Sons.

In September this year, the carrier announced that it is joining hands with the Indian conglomerate to launch a new full service airline in India.

The joint venture will be 51 per cent owned by Tata Sons and 49 per cent owned by Singapore Airlines.

Singapore Airlines' investment will be US$49 million.

In a statement on Monday, SIA added that the establishment of the airline remains subject to further approvals from India's Directorate General of Civil Aviation. 

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India's Tata SIA Airlines expects to take flight by mid-2014

 India's newest planned airline, a joint venture of Tata Group and Singapore Airlines, expects to win swift regulatory clearance and be able to start flying by mid-next year, the carrier's chairman said.

Indian tea-to-steel conglomerate Tata will hold a 51 percent stake and Singapore Airlines Ltd 49 percent in the new venture, which was announced last month, as they seek to exploit one of the world's fastest-growing aviation markets.

"We are looking at very fast clearances. We hope that we will be able to launch by May-June," Prasad Menon, chairman of the new carrier, Tata SIA Airlines, told reporters late Friday.

Even though the Foreign Investment Promotion Board earlier this week cleared the venture to be headquartered in India's capital, a string of other regulatory approvals are needed before the new carrier can take to the skies.

"I don't see any problems" in the new airline obtaining the clearances, aviation minister Ajit Singh told reporters after meeting Tata Sia's executives in New Delhi on Friday.

The airline, which is planning to offer full service unlike rival carriers, which are mainly no-frills, needs a "no-objection certificate" from the aviation ministry.

The airline, which will have an initial combined investment of $100 million from the two stakeholders, marks the third foreign direct investment in the aviation sector since the government declared last year international airlines could buy as much as 49 percent of local carriers.

The Tata Group is setting up another airline venture in India with Malaysia-based budget carrier AirAsia, which is expected to start operations early in 2014.

The government has also cleared the way for Abu Dhabi-based Etihad to pick up a stake in Indian private carrier Jet Airways.

India's aviation sector was once celebrated as a sign of the country's vibrant economy.

Its fortunes faded owing to a range of obstacles ranging from aggressive fare rivalry and rundown infrastructure to expensive fuel, but there now is renewed interest as investors eye the nation's vast aviation market and growing middle class.

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