Vistara plans to expand into international routes

[daring dude]

Phee Teik Yeoh, CEO of Vistara airlines, poses after his interview with Reuters at a hotel in Gurgaon on the outskirts of New Delhi March 31, 2015.
REUTERS/ADNAN ABIDI/

(Reuters) - Airline Vistara plans to expand its fleet size and start flying to overseas destinations within two years, its CEO said on Tuesday, ahead of an expected change in rules that could allow new carriers to operate abroad.

The airline, a joint venture of Singapore Airlines and Indian conglomerate Tata Group, made its debut in January, pitching itself as a full-service premium alternative for passengers willing to pay more than for the budget carriers that handle two-thirds of the country's travellers today.

Vistara is looking to procure an undecided number of new narrowbody and widebody aircraft to increase domestic flights and begin flying to the Gulf and eventually to Europe and the United States, Phee Teik Yeoh said.

"There are lots of opportunities. Suddenly when the 5/20 rule goes away it's a new ball game," he told Reuters in an interview.

Under the existing "5/20" rule, Indian airlines must be up and running for five years or possess 20 planes before they can start flying overseas routes, a restriction the civil aviation ministry has said it is committed to scrap.

"Seventy percent of international traffic that Indians travel is westwards. This is where our focus will be," Yeoh said.

Vistara said last year it will gradually grow the size of its fleet to 20 Airbus A320 aircraft by 2019, all leased from Singapore-based BOC Aviation.

Yeoh said the size and timing of the new plane order would depend on the government revising the rules.

New rules mooted by the ministry will require airlines to earn credits operating domestic routes to entitle them to operate overseas.

Vistara will be competing with Air India and Jet Airways on international routes. Gulf carriers including Emirates and Etihad, which part-owns Jet, have also made inroads into the market.

India is a highly competitive market for air travel. Despite double-digit annual growth in travellers, domestic competition has kept fares low and, along with high costs, left most major players struggling to make money.

Vistara filled less than half its seats in January and February but Yeoh said that would change now that the airline has begun taking advance bookings. "The weakest quarter is behind us," he said.

The airline is rolling out more high-end services to tempt wealthier Indians, Yeoh said, and Vistara will soon open a "lounge" for business travellers in Delhi airport, inspired by the pampered luxury more common to airports in London and Singapore.