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Friday, January 27, 2023

Vistara Halts Plane Orders Ahead of Air India Merger, Eyes International Growth

Vistara has reined in new aircraft orders while it awaits regulatory approval to merge with Air India, but that will not stop the airline from adding more international routes to boost profits, its chief executive said on Tuesday.

The full-service airline, a joint venture between Singapore Airlines and India’s Tata Sons, will receive its backorder for 17 aircraft by mid-2024, bringing its total fleet to 70 aircraft. Tata also owns Air India.

“We haven’t looked at any requests beyond that,” Vinod Kannan told reporters.

“There has been an announcement about the merger and integration with Air India. Once we get approval from the relevant authorities…we will have to sit down with Air India as a joint entity to see what we do,” he said.

Read | 2023: Recovery Winds, Airlines Expansion Plans, Covid Airbags Await Indian Aviation Sector

But Vistara’s expansion will continue and the airline is “not going to back down” because of the integration, he added.

Tata said in November it was merging its two full-service airlines, Air India and Vistara, to create one larger airline to take on local rivals such as IndiGo, as well as Middle Eastern carriers that dominate India’s outbound traffic.

Tata is also expected to announce a new aircraft order for some 495 planes for Air India on Friday, Reuters reported, as it looks to revamp the airline under its ownership.

Vistara, which started operations in 2015, posted its first operating profit in the December quarter on the back of strong travel demand and higher fares, despite rising fuel costs and a weak rupee against the dollar.

Kannan hopes to continue the momentum and flying to more international destinations is a key driver.

“International is where we’re going to focus. That’s where value for money comes into play for Vistara,” he said.

Vistara deploys up to 30% of its capacity on 12 international routes that include cities in Europe, the Middle East and Southeast Asia. These routes contribute 30% of their income.

The airline has put plans to launch flights to the United States on the back burner due to delays in receiving deliveries of its Boeing 787 wide-body jets. Instead, it will strengthen its presence in Europe, where it currently flies with load factors, a measure of how full its planes are, of 85% to 90%, Kannan said.

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