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Vistara, a joint venture between Tata Sons and Singapore Airlines, has said it will concentrate more on the domestic market even if the ‘5/20 rule’ was relaxed or abolished.
“International airlines are dying to enter the Indian market. Indian civil aviation sector has exhibited tremendous resilience during the global economic slowdown and our emphasis will be more on domestic market over international market.
"Like other players, we too are waiting for the new aviation policy to commence our international operations,” said Sanjiv Kapoor, Vistara’s chief strategy and commercial officer.
A study on the Indian aviation sector by Ficci and KPMG indicated a 20 per cent growth in the domestic aviation market in 2015. This might make India the third largest aviation market by 2020.
Kapoor said Vistara’s expansion would depend on the new aviation policy.
“Aviation business is one of scale. So, a bigger fleet with more number of destinations would help in cost cutting.”
At least 15 variations were being evaluated regarding the ‘5/20 rule’.
Under this rule, only those Indian airlines which have a 20-aircraft fleet and have operated in the domestic sector for five years can fly abroad.
Vistara has a fleet of 12 Airbus A320 and by the end of FY18, it would have a fleet of 20 aircraft handling 580 flights per week.
Vistara, which commenced operations from Chandigarh on Monday, is now operating at 16 airports. It would commence flights from Kolkata from next month.
“Ground handling costs are a little less at smaller airports. This year, we’ll add three more airports. Next year, we project to be operating flights from 25 airports,” added Kapoor.
Foreign flights in limbo
With the launch of Vistara’s operations, Chandigarh International Airport now has seven domestic carriers operating from the newly built airport inaugurated by Prime Minister Narendra Modi in September 2015.
The customs and immigration facilities for international passengers were introduced in April on the directions of the Punjab and Haryana High Court.
However, no international flights are operating and there is no certainty over the future of direct international flights from Chandigarh.
The high court has sought a response from the airline operators by May 10 on whether they were ready to start international operations.
The airport currently caters to 4.5 million passengers per annum and is utilising 33 per cent of its capacity.
The annual maintenance cost of the airport is Rs 70 crore (Rs 700 million).
According to estimates, about 40 per cent of the international passenger traffic at the Delhi airport can be handled by the Chandigarh airport.
EYEING A BIGGER FLEET
