Home / Companies / News /  Vistara won’t go for flash sales or aggressive expansion: Sanjiv Kapoor

Mumbai: At Vistara, Sanjiv Kapoor is singing a different tune. The man who built his reputation at SpiceJet Ltd as a flash sales marketer, says Vistara isn’t going to go down that road. Ever. Also, it won’t go for aggressive expansion, said Kapoor, chief strategy and commercial officer in an interview.

Tata SIA Airlines Ltd, known by the brand name Vistara, is a joint venture between Tata Sons Ltd and Singapore Airlines Ltd (SIA), with Tata Sons holding the majority stake of 51% in the company and SIA holding the remaining 49%.

“Vistara will neither engage in unsustainable flash sales of air tickets nor opt for over-aggressive expansion. Thoughtful, measured expansion and pricing is our hallmark," Kapoor said in an interview.

Kapoor, who was chief operating officer at fare warrior SpiceJet, was instrumental in unleashing flash sales and dirt cheap air tickets as part of stimulating the demand, especially during the lean season.

Kapoor must have led at least a dozen of flash sales a year during his previous tenure in SpiceJet.

He always believed that it is a crime to fly with empty seats, and flash sales in 2014 had helped SpiceJet to improve RASK (revenue per available seat-kilometre) trends, besides helping the airline gain market share.

“I had been called all sorts of things for launching flash sales in India in my previous avatar. But let me tell you, even I say it has gone too far now as airlines try to fill excess capacity especially in low season. Last-minute discounting is only going to hurt the industry in the long run, especially as fuel prices rise," Kapoor said.

He added that Vistara will never get into this game.

“You will never see Vistara venturing into Rs.600 all-in or Rs.800 all-in type of flash sales for two primary reasons—on viability perspective and not diluting our customer profile. It’s not necessary for a full service airlines to opt for such throwaway prices," Kapoor said.

However, he added that though Vistara will not have flash sales, it will be running promotional offers. The idea is to keep its pricing levels attractive.

All airlines are in the process of wooing customers by offering promotional fares to beat the lean season.

From June to mid-October, it is lean season for airlines, while the summer quarter of April to June is peak travel season as schools close for holidays during this period.

Vistara has experience the impact of lean season once since it took to the skies on 9 January 2015.

Vistara flew its planes nearly 40% empty during the first 10 months of operations.

The low occupancy stood out in 2015 when passenger traffic rose after years of muted growth and Vistara’s rivals were flying only 10-20% empty.

Flying so many empty seats means lost revenue at a time when the company was spending money to differentiate itself as an upmarket brand.

Now Vistara claims it has high seat occupancy of 80%.

What brought Vistara from 58% levels to high 80% levels of seat occupancy?

“Firstly, it was part of a natural progression of our growth in network and services. Secondly, we learnt as we grew and adjusted our pricing and inventory management strategy. We have always kept a pricing premium compared to not only low fare airlines but also full service airlines," Kapoor said.

He reiterated that Vistara maintained a reasonable premium of prices over ticket prices of full service airlines.

“I cannot share the exact percentage for competitive reasons," Kapoor said.

He said the lower seat occupancy phase is behind Vistara and it is entering the phase of scaling up.

However, he said he has no plans to review the three class configurations of Vistara.

Unlike other full service airline such as Jet Airways (India) Ltd and Air India Ltd, Vistara has three class configurations—business class, premium economy class and economy class.

Many airlines had two classes, business and economy, or three (on international routes), first class, business and economy.

Also, Vistara struggled to fill in the premium economy class, a new concept for India.

“We have structured three class configurations considering our future international aspirations too. It is critical to have common standards for domestic operations to feed and de-feed into international operations," he said.

Vistara is also flying high on its international aspirations. Most recently, the government scrapped the rules that an airline should have at least five years of domestic operations to fly international. Now, the airlines just need 20 planes to start overseas operations.

Nevertheless, Vistara is not rushing to start international operations.

“We are not in race to expand into international operations. We are reviewing the plans. International operations is not a walk in the park. But international is certainly a key part of our strategy," Kapoor said.

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