Travel outlook uncertain, demand may fall amid Covid-19 crisis: Vistara

Domestic air travel resumed on Monday after a span of two months and a majority of passengers in the first four days were those, who were left stranded in different parts of the country.

Full-service carrier Vistara is reviewing its business plans and renegotiating vendor contracts as uncertain travel demand and government restrictions continue to pose challenges to its operations, a senior executive of the airline said.

Domestic air travel resumed on Monday after a span of two months and a majority of passengers in the first four days were those stranded in different parts of the country. On day one, Vistara operated 20 flights, and that increased to 43 on Friday.

“Efforts are on to reduce cash burn. Getting some inflows from operations does help,” Vistara Chief Commercial Officer Vinod Kannan said.

But the airline is unsure about travel demand one month from now as this will largely depend upon the central government’s decisions on lockdown, states relaxing or modifying their quarantine rules, and public confidence in air travel, Kannan said.

Industry-wide load factors in the first four days of operations were 50-55 per cent. Kannan acknowledged there was a real possibility that demand could fall further over the next few weeks. “It is bit unclear on demand and supply side,” he remarked, as states too are imposing restrictions on flight movements.

He said the aviation sector’s role in building passenger confidence would be critical. “On our part we are committed to increasing connectivity and make flying safe,” he added.

Vistara, the joint venture of the Tata group and Singapore Airlines, had planned for a big international expansion this year. The airline inducted its first wide-body Boeing 787-9 in February end. The second aircraft was due in March, but the airline was unable to take its delivery. Delivery of Airbus A321 planes too is delayed.

Kannan said the airline was reviewing its fleet and network plans, anticipating a phased opening of international routes. Discussions are also underway with Airbus on delivery timelines of planes.

Currently, the airline has seven Boeing 737 planes on lease and the airline is also discussing options to return them earlier than scheduled. These planes were flown earlier by Jet Airways.

According to Kannan, the market potential in India remains huge and Vistara’s small size (fleet of 41 planes) and limited share of international operations (it only flies to five overseas destinations) insulates it from some of the problems faced by airlines with large international operations.

But once international operations open, Vistara expects greater demand for non-stop flights to Europe and will be able to put its Boeing 787 planes to good use as customers may want to limit exposure of travelling through transit hubs.