Vistara, the full-service airline jointly promoted by Tata group and Singapore Airlines, is expected to start operations in a month amid much skepticism over how another carrier — and not a low-cost one at that — will survive or thrive in a brutally competitive market.
India’s aviation industry has been a picture of gloom over the last 10 years as high fuel and operational costs, combined with players willing to lose money instead of dropping out, has led to serious wealth destruction for promoters. In such an environment, Vistara has said it aims to be a full-service “luxury” airline, making analysts wonder there will be enough takers for such a carrier.
Other full-service carriers (FSCs) such as the state-owned Air India and Naresh Goyal’s Jet Airways have been saddled with years of losses. The former has been sitting on a debt burden of Rs 26,000 crore and reported a loss of Rs 2,120 crore in FY14. Jet , meanwhile, has turned over a single rupee in profit since 2007 and posted a record loss of Rs 4,129 crore. The other full-service carrier, Vijay Mallya’s Kingfisher , racked up enough losses to sink itself, and along with it, its promoter’s control over his group’s profitable alcohol ventures.
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