Vistara, a new luxury airline, takes wings

India’s airline industry is set to welcome a new entrant: Vistara, a joint venture (JV) between Tata Sons Ltd and Singapore Airlines Ltd.

Vistara will be a full-service airline and will have up to five Airbus 320 single-aisle jets by December, announced Phee Teik Yeoh, chief executive of Tata SIA Airlines Ltd on August 11.

The entry of Vistara into India’s aviation sector seems to be a triumph of hope over experience, as it comes at a time when most airlines in India are facing extreme pressure due to rising fuel prices, high airport charges and intense competition that have limited their ability to increase fares.

However, industry experts are optimistic that India has the potential to become a huge aviation market in the next few years. According to the FICCI-KPMG report, Indian Aviation 2014, the industry has the potential to be the third largest aviation market by 2020 and the largest by 2030.

Earlier in 2014, Centre for Asia Pacific Aviation (Capa), the consultancy, argued the Narendra Modi-led government must step in a help the aviation industry, as it had lost over $ 10 billion in the past few years. One of the key demands was establishing a single national 4 percent tax on jet fuel instead of an arbitrary state-wise tax.

Vistara, which means “limitless expanse” in Sanskrit, involves an initial investment of $100 million, of which Tata Sons, has a 51% stake and Singapore Airlines the rest. The airlines is expected to start operations by October this year.

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