Approval was held up due to CBI investigation into international flying permit of Tata group-owned AirAsia India.
In one of the last decisions taken by the government before the election code of conduct kicked in, it has approved the Tata-Singapore Airlines joint venture Vistara to fly on international routes.
The approval will make Vistara the fifth carrier from India to fly on international routes.
“Vistara has been granted permission to operate on international routes, following suggestions from the Group of Ministers formed to look into the issue. The Ministry of Civil Aviation (MCA) has conveyed the same to Vistara on March 8,” a senior official aware of the development told Business Standard.
Following the approval, Vistara has sought permission to operate flights between Delhi and Colombo seven days a week.
“Vistara has sought bilateral rights to Sri Lanka and slots from Delhi Airport for the same. They will operate the flight with Airbus A320 aircraft,” said an industry source.
Currently, Air India and Sri Lankan Airlines connect Delhi and Colombo via a non-stop flight, while other Indian carriers like IndiGo, SpiceJet, and Jet Airways connect the city from south Indian cities like Chennai, Bengaluru, and Hyderabad.
The approval comes after much delay. It was delayed due to an ongoing probe into AirAsia India for alleged lobbying and bribing government officials for international flight permits.
Both AirAsia India and Vistara are owned by the Tata group.
The government had formed an international committee of five Cabinet-ranked ministers headed by Arun Jaitley to decide if an international flying permit should be given to Vistara.
This was the first time such a panel had been formed for granting an international flying permit to an airline.
Normally, aviation regulator Directorate General of Civil Aviation has the final authority to grant a permit for international operations.
The delay in approval had affected its business plan, as flying rights to Thailand, where it had initially planned to fly, are on the verge of getting exhausted amid low-cost airlines such as IndiGo and GoAir deploying new flights.
The airline has recorded losses in three consecutive years.
It has struggled to command higher fare on domestic routes because of competition from low-cost airlines.
Its business plan is dependent on creating an identity on international routes, where it can command higher fares.
The airline’s chief executive officer Leslie Thng while saying the impact had been minimal said that due to the delay in approval, the airline was forced to deploy a plane earmarked for international routes is being used in the domestic market to increase frequency.
The full-service carrier recently announced launch of 16 new daily flights, including to two new destinations Raipur and Dibrugarh, as part of its network expansion plans.
After reaching the requisite 20 aircraft fleet size, Vistara applied to the MCA for an international permit in June and planned to start flights to Bangkok, Phuket, Colombo, and Male by the winter of 2018.
Experts have called the delay a ‘policy logjam’.
“When India’s third full-service carrier launched, it did so with its eye on the opportunities in the international market.
"More than three years later, Vistara remains a solely domestic carrier, thanks to Indian regulations,” aviation consultancy firm CAPA said.
Photograph: Francis Mascarenhas/Reuters