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Business News/ Companies / News/  Vistara not racing against time to start international operations: CEO
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Vistara not racing against time to start international operations: CEO

Vistara CEO Phee Teik Yeoh says that international operations can take 12-24 months to launch, which will require fresh capital injection

A file phot of Vistara CEO Phee Teik Yeoh. Photo: Ramesh Pathania/MintPremium
A file phot of Vistara CEO Phee Teik Yeoh. Photo: Ramesh Pathania/Mint

Mumbai: Vistara, the full service airline jointly owned by Tata Sons Ltd and Singapore International Airlines, is not rushing to start international operations and will not go for a mega expansion spree that can cause indigestion.

Last week, the civil aviation ministry removed the stipulation that airlines must operate in India for at least five years before venturing abroad, while retaining the rule that they need a minimum of 20 aircrafts before starting overseas flights. Vistara, which started in January 2015, was lobbying for the scrapping of the five-year rule.

Phee Teik Yeoh, chief executive officer of Tata SIA Airlines Ltd-run Vistara, which still has only 11 planes, said in an interview to Mint that international operations can take 12-24 months to launch based on many variables and that fresh capital injection will be required for the proposed operations.

Edited excerpts from the interview:

When do you expect to start international operations?

Indicatively, it takes 12-24 months for launching our international operations, based on many variables. We are also evaluating whether there is any business case for advancing the induction of aircraft, including the 21st aircraft, in the context of launching international operations. Originally, we were supposed to induct our 20th aircraft by June 2018.

We are currently evaluating two scenarios: how soon can we induct our 21st aircraft and how much time we need to enhance our product and service delivery for launching international operations. We are in the process of outlining our domestic growth and international plans.

We will finalise the same in a couple of weeks. We have always said that abolishing the 5/20 rule is just a matter of time. Since clarity has been provided, we will bring up the plan that we have worked on previously. We are going to refine the plan. We will approach our promoters with a 10-year growth plan.

Are you open to buying any airline? May be Air India Ltd for unutilised flying rights?

We are not racing against time to start our international operations. And, therefore, there is no urgent need for any acquisitions. Any possibility of mergers and acquisitions at this point of time is too premature. We are gearing up to deliver nothing but the best compared to Singapore Airlines and nothing less than service excellence compared to any other international airline.

Phee Teik Yeoh, 47As chief executive officer of Tata SIA Airlines Ltd, Yeoh was instrumental in setting up Vistara. In a career with Singapore Airlines Ltd spanning over two decades, Yeoh rose up the ranks and held progressively responsible management roles and headed various departments of the airline in different capacities across different markets. Yeoh, who enjoys golf and music, has been associated with companies, including Abacus International Pte Ltd, Virgin Atlantic Airways Ltd and SilkAir, as a board director. He has also been an Asean Scholar and a Singapore Airlines Scholar. Yeoh’s academic qualifications include a Bachelor of Science degree with First Class Honours in Chemistry from the National University of Singapore.

What is most important is that we are not rushing to achieve our international ambitions. We will go overseas only when we are ready with the customised products and services that are relevant to international passengers. Our product will be several notches better and improved than what it is today as we keep introducing creativity and innovation in our offerings.

Is Delhi airport capable enough to support your network ambitions?

We have already chosen Delhi Airport as our hub for domestic and international operations. The hub is structured in such a way that all domestic operations will feed into international operations. Delhi airport and Vistara have a symbiotic relationship to make Vistara as the number one international airline of India and Delhi airport as India’s number one international airport. Our success will be Delhi airport’s success and Delhi airport’s success will be our success. We will work together in transforming Delhi airport into India’s major international hub.

Hiring crew is going to be expensive for ramping up your capacity for international operations. How will you deal with that?

The requirement of pilot and cabin crew for international operations will not be any different from the requirement for our proposed international operations. We have adopted a strategy to recruit pilots and cabin crew on the basis of our future growth in the most sustainable way. We are focused on measured growth and, hence, we will not go for a mega expansion spree that can cause indigestion. We are aware about the ability and inability of coping up with high growth of Indian civil aviation and the challenges attached to recruitment.

Where will you fly overseas? How will the transition happen?

We will be spoilt for choice when it comes to international destinations. We have so many international destinations that hold a lot of potential for delivering our product leadership and service excellence. When we set up Vistara, international operation was in our mind and products and network were designed according to that. Significantly, we were always committed to increase our domestic footprint. Barring Mumbai, we have actually launched operations to many Indian cities which are highly relevant to our future international operations.

We fly to 17 cities out of our hub Delhi Airport. We have launched 17 destinations since our inception. These 17 cities are relevant destinations to offer feed traffic to our proposed international operations. The product transition from domestic to international would be seamless. It will be at least a few notches above our domestic service offerings.

An Indian airline incurred a cost of $80-100 million in its first year of international operations. What is the expected cost for starting decent international operations?

It is too early to comment about the cost of starting international operations. We are going to talk to the promoters about the international-cum-domestic plan in a couple of weeks. Once we get the approval from promoters, we may be able to quantify the required investments. However, we will definitely require fresh capital injection for the proposed international operations.

Would you go for wide-body planes for international operations? (Widebody planes will help the airline fly longer international routes.)

Aircraft for international operations is anybody’s guess. It could be narrow-body planes or wide-body. We could fly short haul, medium or long haul international destinations. It is too early to comment on it.

Lastly, how you do see the new policy?

We must applaud the government to publish a policy that will fuel the growth of civil aviation in India and enhance the remote connectivity. This will help India become the largest civil aviation market in the world by 2025.

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Published: 22 Jun 2016, 01:33 AM IST
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