Airline lobby group to consider Vistara entry
New Delhi: The Federation of Indian Airlines, which three years ago fought unsuccessfully to block new airline Vistara appears to be softening its stand.
Vistara, a joint venture by Tata Sons and Singapore Airlines, has made a request to join the lobby group, a person aware of the matter said, declining to be identified. According to SpiceJet Ltd chairman Ajay Singh, FIA is likely to take up the request at its next meeting.
“Yes; that’s right,” Singh said, referring to the request. “FIA has to take a call. I guess whenever there is the next FIA meeting this has to be taken up.”
FIA members, which include InterGlobe Aviation Ltd (operating IndiGo, India’s largest airline), SpiceJet, Jet Airways (India) Ltd and GoAir, fly eight out of 10 domestic air passengers.
Until 2014, foreign airlines were not allowed to own stakes in Indian airlines. The change in rule that year enabled the launch of Vistara and AirAsia India, both backed by the Tata group.
FIA moved court against the grant of licence to the two airlines, claiming the new rules were meant to bring foreign investments into existing airlines, and not to start new ones with foreign airline investments. They also claimed Vistara and Air Asia India were controlled by foreigners.
It is not clear when the airlines are scheduled to meet next. This is Vistara’s second attempt to join FIA. The first attempt in 2016 was not fruitful.
An IndiGo spokesperson declined to comment. Emails sent to Jet Airways and GoAir went unanswered. Vistara declined to comment.
The request comes at a time when SpiceJet’s Singh is likely to take over as the new head of Confederation of Indian Industry’s aviation committee, the first person mentioned above said. Singh did not deny the move but declined to offer comments on it. This position is currently held by Vistara.
It also comes after interest by both IndiGo and Tatas in Air India Ltd.
Tata Sons Ltd executive chairman N. Chandrasekaran told CNBC-TV18 earlier this week that the Mumbai-based group is considering buying state-owned flag carrier Air India and that there was a need to scale up.
“We will definitely look at it,” Chandrasekaran said, adding, “We need to look at aviation as a whole. We are subscale. We got two airlines both are subscale. Any decision that we take—Air India or otherwise—we have to have a story because we can’t be operating with 15 aircraft or 20 aircraft. I feel scale is important, in every industry, in every group we operate in, scale is important. Without scale, you get to a situation where you are all over the place and it is very, very difficult to pay management attention.”
Vistara now flies to 21 destinations within India, with over 660 weekly flights operated by 16 Airbus A320 aircraft. Singapore Airlines holds 49% in Vistara while Tata Sons Ltd holds 51%.
Air India was launched in 1932 by industrialist and aviator J.R.D. Tata as Tata Airlines. It was later nationalized and came under government control.
Moves by Tata and Singapore Airlines to buy it in the past two decades have not worked in the heavily lobbied sector.
“No one in the airlines business cares for the others except for themselves and each one is trying to figure out how to neutralize or squash the opposition,” said Steve Forte, a former Jet Airways CEO. “Strength is in numbers and if Vistara has a common agenda with FIA, then it would make sense to let them join. A united front on issues forces the government to reflect on their decisions and makes it more difficult for Delhi to play one airline against the other.”