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Last Modified: Sat, Dec 20 2014. 10 12 PM IST

P. R. Sanjai

Five things Vistara is doing differentlyVistara is not offering steep discounts, and it has a loyalty programme based onmoney spent rather than based on miles flown

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Vistara is not spending much on advertisements or expensive launch parties and has also optedfor three class configuration instead of two. Photo: Ramesh Pathania/Mint

Mumbai: When the first flight of full-service airline Vistara, promoted by a joint

venture of Tata Sons Ltd and Singapore Airlines Ltd, takes off on 9 January from New

Delhi to Mumbai, it will perhaps begin a new, and hopefully brighter chapter for Indian

aviation that has been going through turbulent times in the past few years.

The second coming in this sector of the Tata group, which had started the country’s

first airline that eventually became Air India Ltd, is likely to intensify competition

amongst full-service airlines. Jet Airways (India) Ltd, the country’s second-largest

airline by passengers carried, has already announced that it is shutting its budget

division and returning to its full-service roots.

“This is an exciting airline launch which I was waiting for a long time. Vistara has in

its lineage some of the world’s most pioneering and respected enterprises,” says Ajay

Awtaney, who booked a ticket on the inaugural flight for Rs.11,500. “I just want to

experience the newest full-service carrier ahead of everyone else,” said Awtaney, a

financial services professional and travel writer based in Mumbai.

In the span of a few hours on 11 August, India went from having one real full-service

airline to having three. The state-owned Air India was the only completely full-service

airline operating in the country. Generally airlines are launched with much fanfare.

Now-grounded airline Kingfisher Airlines Ltd was launched by billionaire Vijay Mallya

with an advertisement blitzkrieg and much fanfare. In contrast, Vistara decided on a

quiet launch.

Mint takes a look at the five things Vistara is doing differently.

No cheap fares, no discounts

To start with, Vistara is not offering steep discounts, unlike its rivals. Most recently,

AirAsia India, Tata Son’s other joint venture with AirAsia Bhd, in May had offered Rs.5

tickets with over 15,000 promotional seats to celebrate the announcement of its

inaugural routes. Singapore Airlines is known for its premium pricing.

As a world-class full service carrier, Vistara promises a seamless experience and

service excellence on-board and on-ground, chief executive officer Phee Teik Yeoh

said. “Besides market forces, our pricing strategy is determined by the value

proposition we offer. We are focused on approaching the market differently and this

reflects well in all the innovations we are introducing in our product and service

offerings,” Yeoh says.

Vistara tickets cost at least Rs.1,000 more that those offered by Jet Airways and Air

India, according to Regi Philip, who runs Cosmos Agencies, a Mumbai-based travel

agency.

The industry expects the launch of the airline to kick off a more focused segmentation

of the Indian domestic market, which has so far seen only a price-focused

competition, said Samyukth Sridharan, chief operating officer at online travel agency

Cleartrip.

“I expect to see the standard of service by the full-service carriers to become more

focused and a clear segmentation between them and the low-cost carriers to emerge,

which has been missing so far,” Sridharan said. “Given all that we have heard from

Vistara, we do not expect a price-based competition from the airline.”

Loyalty by money, not miles

Vistara is the first airline in India to offer a value-based frequent flyer programme

called Club Vistara, where loyalty points are accrued based on actual spending on

fares rather than miles travelled. The airline has done away with the physical loyalty

card.

In other words, a registered Club Vistara member gets points based on the money he

has spent on travelling.

As a head of family, an individual can accrue points if he or she is booking for family

members up to five.

“The value-based programme is more equitable as the points accrued are directly

correlated to the amount spent,” Vistara’s chief executive said. “It’s also more

transparent and easier for customers to understand. As evidenced by recent industry

trends, there’s an emerging move away from the traditional mileage-based to a value-

based scheme.”

Rival Jet Airways has a loyalty programme based on miles travelled.

Low-cost thinking, full-service offering

Vistara is maintaining a lean structure of operations while offering a full-service

product. Experts say it is easy for Tata group and Singapore Airlines as they are

starting afresh without any legacy cost. Tata group’s second Indian joint venture—

AirAsia India—is also known for ruthlessly cutting costs. Vistara is adding planes one

by one. The same holds true for its routes.

“We will leverage on IT and innovation to deliver cost leadership, operational and

service excellence,” Yeoh said.

Vistara is keeping a low-cost mentality in every single contract they are signing

barring in-flight facilities, aircraft and dining, an airline consultant said, requesting

anonymity.

“There are no lavish contracts with external vendors. They are scrutinizing every

single contracts be it personnel or office space,” he says.

As it is maintaining a low-cost structure, economy class passengers can expect a

more robust offering than a standard no-frill airlines, said Ranjeet Oak, senior vice

president, flights, at MakeMyTrip (India) Pvt. Ltd, an online travel agency.

No advertisement splash, no fanfare

P. R. Sanjai

The name Vistara is derived from the Sanskrit word Vistaar, which means limitless

expanse. But the airline is not spending much on advertisements or expensive launch

parties. Vistara is launching quietly as if it wants to stay under the radar.

“Our customers will soon see the splash of our integrated marketing campaign across

media,” says Yeoh. “We aim to stay close to our potential customers through constant

engagement at all consumer touch-points and the objective is to create that unique

and memorable experience that’s quintessentially Vistara.”

Three-class configuration

Vistara is the first full-service carrier in India to introduce a so-called premium

economy class. Vistara’s 148-seater Airbus A320-200 will offer three separate cabins,

with 16 seats in business, 36 in premium economy and 96 in economy class. Jet

Airways has a two-class configuration that includes business and economy.

Kingfisher Airlines, now grounded, had first-class and economy.

“A three-cabin service in the domestic market is a first and will certainly create some

excitement in the retail and corporate travel segment. The additional inventory will

certainly lead to some attractive pricing in the coming months leading to the much-

needed increase in demand,” says Sunny Sodhi, chief operating officer, corporate

travel, and senior vice-president, air product, at Yatra Online Pvt. Ltd, another online

travel agency firm.

Cleartrip’s Sridharan said this is an interesting move and there is no precedent for this

in the domestic market, though it is a tested model on international flights. According

to its website, Vistara offers 42-inch seats in its business class while Jet Airways

offers 40-inch seats.

“Our brand promise is to provide a new flying experience to our customers from all

strata and we believe that our three-class configuration will help us provide a more

differentiated experience,” says Yeoh. “Our premium economy cabin is aimed at the

traveller who relishes the additional space and amenities to work or relax without the

expense of a business-class ticket.”

TOPICS: VISTARA TATA SONS SINGAPORE AIRLINES AVIATION AIR INDIA

First Published: Sat, Dec 20 2014. 01 05 AM IST

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