Near-term Travel Outlook Uncertain, Demand May Fall Further: Vistara

Vistara is reviewing its business plans and renegotiating vendor contracts as uncertain travel demand and government restrictions continue to pose challenges to its operations.

Domestic air travel resumed on Monday after a span of two months and a majority of passengers in the first four days were those, who were left stranded in different parts of the country. On day one, Vistara operated 20 flights and that increased the number to 43 on Friday.

"Efforts are on to reduce cash burn. Getting some inflows from operations does help," Vistara's chief commercial officer Vinod Kannan said.

However, the airline is unsure about the travel demand one month from now as this would largely depend upon on the government's decision on the lockdown, states relaxing or modifying their quarantine rules and public confidence in air travel, Kannan said.

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Industry-wide load factors in the first four days of operations were around 50-55 per cent. Kannan acknowledged there is a real possibility that demand could fall further over the next few weeks. "It is bit unclear on demand and supply side," he remarked as states too, are imposing restrictions on flight movements.

He said that the aviation sector's role in building passenger confidence would be critical. "On our part we are committed to increase connectivity and make flying safe," he added.

Vistara, the joint venture of Tata group and Singapore Airlines, had planned for a big international expansion this year. The airline inducted its first wide body Boeing 787-9 in February end. The second aircraft was due in March, but the airline was unable to take its delivery. The delivery of Airbus A321 planes too, is delayed.

Kannan said the airline was reviewing its fleet and network plans anticipating a phased opening of international routes.

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Discussions are also underway with Airbus on delivery timelines of planes. Currently, the airline has seven Boeing 737 planes on lease and the airline is also discussing options to return them earlier than schedule. These planes were flown earlier by Jet Airways.

According to Kannan, the market potential in India remains huge and Vistara’s small size (fleet of 41 planes) and limited share of international operations (it only flies to five overseas destinations) insulates it from some of the problems faced by airlines with large international operations.

However, once international operations resume, Vistara expects greater demand for non-stop flights to Europe and will be able to put its Boeing 787 planes to good use as customers may want to limit exposure of travelling through transit hubs.