Hope airfares come to right sweet spot, says Vistara CEO
Emphasising that airfare is a function of supply and demand, full-service carrier Vistara’s chief Vinod Kannan has expressed hope that ticket prices will come to the “right sweet spot where customers will travel and airlines can make money”.
Vistara, a joint venture between Tata Group and Singapore Airlines, currently, operates around 320 flights daily.
To a query on concerns in certain quarters about air ticket prices going irrationally high, the airline CEO said the thing with airfares is that people complain when it goes high and no one compliments when it goes down.
“There are times in the year due to seasonality…our fares in 2023 were even lower than 2022,” he noted.
During an interaction with PTI, Mr. Kannan said that certain measures are in place to ensure that airfares are not irrational, especially when there are natural calamities or when something unfortunate happens.
In such situations, “we want to make sure that it is not a price-gouging opportunity,” he said.
“If you look at it on a year-on-year basis, the average price of a ticket, in fact, for the last 20 years, has not changed between Delhi and Mumbai. If you look at the average fare a person paid in the early 2000s and compared to how much they pay today, you will find there is not much of a change, but costs have gone up,” Mr. Kannan noted.
According to him, it is also because of capacity coming in, growth of low-cost airlines and various other things that have kept it that away.
“Pricing… is a function of supply and demand, and let’s hope that it comes to the right sweet spot where customers will travel, and airlines can make money,” he said.
On whether he thinks airfares in India will reach a level, where it is at par with the global level, Mr. Kannan said that will be a function of the growth trajectory.
“We are not perhaps as mature as some of the Western markets. It is a growing economy, and it is also a function of where we fly.
“The secondary and tertiary cities, which are becoming more popular, as they become mature, hopefully, they will come to a situation, like I said, a sweet spot. It is a state of play,” he said.
Vistara, which has been flying for nine years, is in the process of getting merged with Air India.
Tata Group, in November 2022, announced the merger of Vistara with Air India under a deal wherein Singapore Airlines will also acquire a 25.1 per cent stake in Air India.
“This is a merger for growth, it is not for cost-cutting or efficiencies. We are not looking at people losing their jobs, and definitely, there is going to be a job available for them in the bigger entity.
“In fact, learnings from Vistara will be translated to make Air India or the joint entity even better…,” Mr. Kannan said.
Stressing that the airline had nine years of “amazing growth”, he said network growth has been planned in the next three to six months.
“Then, once we have all the legal approvals, we will start discussing with Air India about the next step,” he added.
On the integration plans, he said there are some things already happening that are legally allowed.
“We have CCI approvals, and some more competition approvals are pending, which we hope to get in the next few months… There are also other activities we can do which are not competitively sensitive. Things around operations, experience, sharing knowledge, and looking at how the structure should be in the integrated entity.
“Once we have the approvals, we can talk about networks, a little bit more closer cooperation,” Mr. Kannan said.
