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This article was first published 2 years ago  » Business » 'If demand happens, fares will correct themselves'

'If demand happens, fares will correct themselves'

By Aneesh Phadnis & Arindam Majumder
Last updated on: April 06, 2022 12:13 IST
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'I don't think there will be a direct reaction to the fuel price hike on air ticket prices.'

IMAGE: Vistara's Boeing 787-9 Dreamliner in New Delhi. Photograph: ANI Photo

Being the CEO of an airline in current condition is not a very envious C-suite job.

With fuel price at record highs, the recovery from the disruption caused by the pandemic is likely to be delayed.

If the airline is Vistara, it now has additional issues -- major shareholder Tata Sons is still finalising plans of how its airline business would look.

The carrier is faces hurdles in international expansion due to delayed deliveries of the Boeing-787.

"We are still Vistara -- an independent separate airline. We are taking another 20 aircraft in the next two years," Vistara CEO Vinod Kannan tells Aneesh Phadnis and Arindam Majumder/Business Standard after Tata Sons's acquisition of Air India.


There has been a round of fare hikes due to the rise in fuel price. Has that impacted passenger demand?

When fuel goes up, fares will invariably go up. That has happened in the past too.

We have to see if it holds on because when there is more capacity, fares will come down.

There is also this factor that the industry hasn't returned to its 100 percent pre-COVID capacity.

So, as of now, we are very thankful that the fare increase is still holding. Load factors are still strong.

It looks like fuel price will be on the upper cycle for some time now. Do airlines have the cushion to increase price every time there is a hike in fuel price?

In any case, prices are subject to supply and demand. They are subject to capacity.

I don't think there will be a direct reaction to the fuel price hike on air ticket prices.

If demand happens, fares will have to correct themselves.

Thankfully, that correction hasn't yet happened.

So if that happens, and when that happens we will have to see.

There will be more capacity deployment in the summer schedule. What does the forward load of one month advance indicate?

The forward loads for the next one month is still healthy. There is no dip.

The momentum which was built up from February is still holding.

Of course, the question will be when the new capacity comes back. But for now things are holding.

IMAGE: Vinod Kannan, Vistara CEO.

You apologised to customers saying that there was a dip in service quality. What steps has the airline taken to improve that?

The inflight menu and offerings are coming back with addition of new things both domestic and international.

The issue was also because of manpower which we have ramped up whether at the contact centre or cabin crew side.

We have also apprised the organisation of our plans to augment services.

We are also implementing more technology to address many of the pain points highlighted by the customer.

Many of those pain points were due to rapid expansion and then sudden degrowth due to the third wave.

In terms of your long haul network expansion, you are hurdled by the late in delivery of the 787-9 aircraft. Any update from Boeing on that?

We have asked Boeing for updates. We still don't have a firm picture on that.

So, we have started looking at other options on whether we should get a temporary lease of aircraft.

The only drawback in that is with the current level of fuel price, some of those may be very challenging. From a financial perspective, we are evaluating.

The aircraft we are looking at is the 787 but with capability to do US flights.

It will need more engine thrust, take-off weight and crew berth.

So you have dropped the one-stop flight to the US as an option?

Even for one-stop I need new aircraft because the current aircraft are being fully utilised.

So, if I am taking a new aircraft it is better to do it non-stop. All these things are currently under negotiations.

Photograph: Francis Mascarenhas/Reuters

One of your shareholders, Tata Sons, is now fully devoted to take Air India back to shape. What happens to Vistara in such a case?

The fact is that the shareholders have been supportive. Recently, there has been an infusion of funds.

What happens eventually is something that is under discussion by the shareholders.

How do you communicate to your staff in such a situation where the future is not clear?

My message to staff is very clear. We are still Vistara -- an independent separate airline.

We are taking another 20 aircraft in the next two years. So, let's focus on that.

Feature Presentation: Rajesh Alva/

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