Vistara pioneered premium air travel in India, and now, its competitors are following suit.
The aubergine-coloured airline, Vistara, flew under its own flight code ‘UK’ for the last time on Monday (November 12, 2024).
He has flown 84 flights with Vistara since March 2015. His first Vistara flight was on his 30th birthday with a large group of friends.
Despite its popularity in a niche traveller segment, the airline wasn’t able to clock a profit at any time during its nine years of existence. Between the financial years 2015 and 2024, the airline’s total operational revenue grew from ₹69 crore to ₹15,191 crore. During this time, Vistara’s promoters, Tata Sons and Singapore Airlines, pumped in ₹10,020 crore over a decade.
“The airline created value for its stakeholders, but failed to create value for its shareholders,” one industry analyst said, on condition of anonymity.
A part of the airline’s huge operational cost was also a result of expensive contracts, including aircraft leases and airport agreements, those familiar with the airline’s business operations said.
But were travellers willing to pay for the frills they so loved in a market dominated by low-cost carriers? “To quote another industry veteran, an airline can’t set fares, the market does,” a former Vistara executive said.
But this is slowly shifting with premiumisation driving growth among affluent consumers across industries, including in travel.
In June of this year, Air India announced that it would offer a ‘Premium Economy’ on all its narrow-body aircraft used for domestic and short-haul international routes, apart from the new aircraft that will join its fleet. “Vistara created a differentiated product through ‘Premium Economy’ and we wanted to continue with that at Air India,” an Air India executive said.
IndiGo’s Strategy Targets Premium Travelers Amidst Increased Competition
These planes will connect India to southern Europe and deepen the airline’s reach into Asia. Additionally, the delivery of Airbus A350 widebody aircraft from 2027 will enable IndiGo to offer long-haul international connectivity.
Even within Air India, some say Vistara as a sub-brand may be retained, but a decision will be taken in the next six months, when the airline aims to complete the revamp of its entire narrow-body fleet. “Our strategy has to evolve with what people want. We live in a dynamic environment,” an Air India executive said.
For now, it appears that even if Vistara as it has been known isn’t around, its ‘Fly the new feeling’ motto is here to stay.
