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Why Vistara's decision to induct mono-class aircraft a double-edged sword

While it is worth investing in multiple fleet types so that the right aircraft can be deployed on the right market, the critical thing here is the timing.

March 07, 2021 / 04:38 PM IST

The landing of VT-TYA in India marked another beginning for Vistara -- the TATA-SIA joint venture which completed six years of operations this January. The aircraft is configured in 180 all-economy seats as put out by fleet-tracking websites. While this looks diametrically opposite to its last major induction - the A321neo in July 2021, which saw the airline become the only airline in South Asia to offer lie-flat beds on narrowbody, Vistara had long planned to have a mono-class sub-fleet.

While VT-TYA is the second all-economy aircraft in the fleet of Vistara, the first one was a last-minute induction based on availability in the market. VT-TNN is the other aircraft in the fleet which is all economy. The airline had inducted this aircraft immediately after the suspension of Jet Airways since the government had linked distribution of slots to addition of capacity and the aircraft made it to the fleet as it was one of the few A320neo available for leasing, again due to demise of another carrier - WOW air in this case!

Vistara has had its own share of fleet mix problems. The airline started with a premium heavy configuration of 16 Business, 36 Premium Economy and 96 Premium Economy class seats, offering 148 seats in the aircraft. This was later revised to 8 Business, 24 Premium Economy and 126 Economy class seats, offering a total of 158 seats. When the airline introduced the economy lite fares, aircraft started being reconfigured again with a row of seats added to the economy class taking the economy class seats to 132 and a total seating to 164. There is an increase of 10.8 percent seats, and while this might immediately look like lower costs per seat, it does not necessarily work this way since the cost of seat across the three classes is different and so is the revenue coming in from them.

For a full-service carrier, a sub-fleet is the best foot forward since, unlike the low-cost carriers which look for a one-size-fits-all plan, the business class demand varies from sector to sector with the metro sectors led by Mumbai-Delhi often seeing the Business class sold out but certain sectors not attracting any business class passenger.

The Mix, Benefits and Challenges

Close

As it stands today, the airline has a mix of A320s, A320neo, A321neo and B737-800 as its narrowbody mix. There already were challenges when the airline started deploying the B737-800s which were a dated product as compared to the brand new A320 family which the airline inducted and the Boeing’s did not feature the Premium Economy.

Having a sub-fleet helps match the demand and passenger mix. In a country like India where there is further mix of rules like the Route Dispersal Guidelines -- mandating airlines to operate a certain percentage of capacity deployed on metro routes to North East and other specific regions -- which may not always have demand for Business Class, an all-economy configuration gives the airline the ability to deploy more capacity (by ASK) and offer competitive fares to take on the Low-Cost Carriers. When used effectively, this helps stem losses and attract higher passengers - both helping the bottom lines. While there is a general trend to discount economy class seats in favour of gaining revenue as every unsold seat is a lost opportunity, the same is not applied to Business Class since it dilutes the product.

Over a period of time, aircraft are withdrawn for service for varying periods for regular maintenance. At times it could be all of a sudden leading to passengers booking in the premium classes being downgraded to economy. The airline has six codeshare partners and 30 interline partner carriers. For customers from the premium cabins, there is a huge mismatch in experience. Its sole all-economy aircraft VT-TNN is currently deployed on Delhi- Raipur-Delhi-Indore-Delhi rotation as per Flightradar24. The airline operates twice a day to Raipur from Delhi and offers Premium Economy and Business on the evening departure. This is the kind of mismatch the same market sees.

Tail Note

A sub-fleet has always been a double-edged sword. On its last leg, both Kingfisher and Jet Airways moved towards standardisation. While Kingfisher had opted for 12 Business class and 156 Economy class seats, Jet Airways was happy with just 8 business class seats.

When airlines like Vistara invest in IT systems which allow them to handle the scheduling of complex nature at ease, it is also worth investing in multiple fleet types so that the right aircraft can be deployed on the right market. The critical thing here is the timing. Is it possible to do this when the airline is 10 aircraft old or when it is nearly 50 aircraft old? A larger fleet gives the flexibility and that is where Vistara seems to be headed right now. What makes the issue a little more challenging for Vistara unlike its counterparts in Europe is that European FSCs have a regional business class which keeps the middle seat empty and comes with frills, while in India, Vistara has a dedicated seat with amenities and the difference gets noticed immediately.
Ameya Joshi runs the aviation analysis website Network Thoughts.
first published: Mar 7, 2021 04:38 pm

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