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Business News/ Companies / Five things Vistara is doing differently
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Five things Vistara is doing differently

Vistara is not offering steep discounts, and it has a loyalty programme based on money spent rather than based on miles flown

Vistara is not spending much on advertisements or expensive launch parties and has also opted for three class configuration instead of two. Photo: Ramesh Pathania/MintPremium
Vistara is not spending much on advertisements or expensive launch parties and has also opted for three class configuration instead of two. Photo: Ramesh Pathania/Mint

Mumbai: When the first flight of full-service airline Vistara, promoted by a joint venture of Tata Sons Ltd and Singapore Airlines Ltd, takes off on 9 January from New Delhi to Mumbai, it will perhaps begin a new, and hopefully brighter chapter for Indian aviation that has been going through turbulent times in the past few years.

The second coming in this sector of the Tata group, which had started the country’s first airline that eventually became Air India Ltd, is likely to intensify competition amongst full-service airlines. Jet Airways (India) Ltd, the country’s second-largest airline by passengers carried, has already announced that it is shutting its budget division and returning to its full-service roots.

“This is an exciting airline launch which I was waiting for a long time. Vistara has in its lineage some of the world’s most pioneering and respected enterprises," says Ajay Awtaney, who booked a ticket on the inaugural flight for 11,500. “I just want to experience the newest full-service carrier ahead of everyone else," said Awtaney, a financial services professional and travel writer based in Mumbai.

In the span of a few hours on 11 August, India went from having one real full-service airline to having three. The state-owned Air India was the only completely full-service airline operating in the country. Generally airlines are launched with much fanfare. Now-grounded airline Kingfisher Airlines Ltd was launched by billionaire Vijay Mallya with an advertisement blitzkrieg and much fanfare. In contrast, Vistara decided on a quiet launch.

Mint takes a look at the five things Vistara is doing differently.

No cheap fares, no discounts

To start with, Vistara is not offering steep discounts, unlike its rivals. Most recently, AirAsia India, Tata Son’s other joint venture with AirAsia Bhd, in May had offered 5 tickets with over 15,000 promotional seats to celebrate the announcement of its inaugural routes. Singapore Airlines is known for its premium pricing.

As a world-class full service carrier, Vistara promises a seamless experience and service excellence on-board and on-ground, chief executive officer Phee Teik Yeoh said. “Besides market forces, our pricing strategy is determined by the value proposition we offer. We are focused on approaching the market differently and this reflects well in all the innovations we are introducing in our product and service offerings," Yeoh says.

Vistara tickets cost at least 1,000 more that those offered by Jet Airways and Air India, according to Regi Philip, who runs Cosmos Agencies, a Mumbai-based travel agency.

The industry expects the launch of the airline to kick off a more focused segmentation of the Indian domestic market, which has so far seen only a price-focused competition, said Samyukth Sridharan, chief operating officer at online travel agency Cleartrip.

“I expect to see the standard of service by the full-service carriers to become more focused and a clear segmentation between them and the low-cost carriers to emerge, which has been missing so far," Sridharan said. “Given all that we have heard from Vistara, we do not expect a price-based competition from the airline."

Loyalty by money, not miles

Vistara is the first airline in India to offer a value-based frequent flyer programme called Club Vistara, where loyalty points are accrued based on actual spending on fares rather than miles travelled. The airline has done away with the physical loyalty card.

In other words, a registered Club Vistara member gets points based on the money he has spent on travelling.

As a head of family, an individual can accrue points if he or she is booking for family members up to five.

“The value-based programme is more equitable as the points accrued are directly correlated to the amount spent," Vistara’s chief executive said. “It’s also more transparent and easier for customers to understand. As evidenced by recent industry trends, there’s an emerging move away from the traditional mileage-based to a value-based scheme."

Rival Jet Airways has a loyalty programme based on miles travelled.

Low-cost thinking, full-service offering

Vistara is maintaining a lean structure of operations while offering a full-service product. Experts say it is easy for Tata group and Singapore Airlines as they are starting afresh without any legacy cost. Tata group’s second Indian joint venture—AirAsia India—is also known for ruthlessly cutting costs. Vistara is adding planes one by one. The same holds true for its routes.

“We will leverage on IT and innovation to deliver cost leadership, operational and service excellence," Yeoh said.

Vistara is keeping a low-cost mentality in every single contract they are signing barring in-flight facilities, aircraft and dining, an airline consultant said, requesting anonymity.

“There are no lavish contracts with external vendors. They are scrutinizing every single contracts be it personnel or office space," he says.

As it is maintaining a low-cost structure, economy class passengers can expect a more robust offering than a standard no-frill airlines, said Ranjeet Oak, senior vice president, flights, at MakeMyTrip (India) Pvt. Ltd, an online travel agency.

No advertisement splash, no fanfare

The name Vistara is derived from the Sanskrit word Vistaar, which means limitless expanse. But the airline is not spending much on advertisements or expensive launch parties. Vistara is launching quietly as if it wants to stay under the radar.

“Our customers will soon see the splash of our integrated marketing campaign across media," says Yeoh. “We aim to stay close to our potential customers through constant engagement at all consumer touch-points and the objective is to create that unique and memorable experience that’s quintessentially Vistara."

Three-class configuration

Vistara is the first full-service carrier in India to introduce a so-called premium economy class. Vistara’s 148-seater Airbus A320-200 will offer three separate cabins, with 16 seats in business, 36 in premium economy and 96 in economy class. Jet Airways has a two-class configuration that includes business and economy. Kingfisher Airlines, now grounded, had first-class and economy.

“A three-cabin service in the domestic market is a first and will certainly create some excitement in the retail and corporate travel segment. The additional inventory will certainly lead to some attractive pricing in the coming months leading to the much-needed increase in demand," says Sunny Sodhi, chief operating officer, corporate travel, and senior vice-president, air product, at Yatra Online Pvt. Ltd, another online travel agency firm.

Cleartrip’s Sridharan said this is an interesting move and there is no precedent for this in the domestic market, though it is a tested model on international flights. According to its website, Vistara offers 42-inch seats in its business class while Jet Airways offers 40-inch seats.

“Our brand promise is to provide a new flying experience to our customers from all strata and we believe that our three-class configuration will help us provide a more differentiated experience," says Yeoh. “Our premium economy cabin is aimed at the traveller who relishes the additional space and amenities to work or relax without the expense of a business-class ticket."

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Published: 20 Dec 2014, 01:05 AM IST
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