New way to fly: Vistara chief shakes up India's domestic travel

Mr Yeoh, an SIA veteran seconded to head the SIA-Tata joint-venture Indian airline, is seeking a rule change that will allow Vistara to offer international flights sooner.
Mr Yeoh, an SIA veteran seconded to head the SIA-Tata joint-venture Indian airline, is seeking a rule change that will allow Vistara to offer international flights sooner.PHOTO: VISTARA

Vistara chief shakes up India's domestic travel with premium economy, among other firsts

His start-up may still be in the red, but a Singapore Airlines (SIA) veteran is transforming the face of Indian aviation - doing things never tried before in India and lobbying for a rule change that could transform the market.

Since taking the helm at Vistara, which started flying 14 months ago, chief executive Yeoh Phee Teik and his team have scored several firsts in Indian domestic travel.

The airline - 49 per cent owned by SIA and the rest by Indian conglomerate Tata - is the first to offer a premium economy product, mobile boarding passes and separate check-in and boarding rows for different classes.

Vistara is also doing an in-flight Wi-Fi trial.

"These are simple things, common at many other airports and airlines, that make a big difference to travellers," he said.

Mr Yeoh, 48, was speaking to The Straits Times at his office in Gurgaon, south of New Delhi, where he sits among his staff in an open space for ease of interaction and communication.

Meals are another key differentiator on Vistara flights. Along with the idli (a rice cake) and thosai (a light crepe) - traditional food items served on most domestic flights - passengers also dig into chicken pies and mushroom risotto.

But the biggest challenge for Mr Yeoh, who has been with SIA for 25 years and was tasked to run the Indian start-up, is to convince the Indian government to throw out a regressive rule.

It is one that prevents Vistara and other Indian start-up carriers from expanding overseas.

"5/20 has no place in India today," he said, referring to the age-old rule that bans Indian carriers from going international until they have done five years of domestic flying and grown to 20 aircraft.

All it does is allow foreign carriers, primarily those based in the Middle East, to cash in on strong growth in India's air travel market, at the expense of local players, Mr Yeoh said.

"The government needs to decide what is good for India, not what is good for Vistara or anyone else," he said.

Despite being the country's capital city, New Delhi is connected to just 59 international points.

Mr Yeoh said: "Dubai - where Emirates is based, just a few hours away, and thriving at the expense of India - is connected to about 220 cities."

More than seven in 10 travellers flying in and out of India are Indians, and of the number, only 30 per cent fly on Indian airlines.

About a third of all international seats to and from India are provided by the Middle-Eastern carriers, which carry travellers to their final destinations through Dubai, Doha and Qatar, among other hubs, Mr Yeoh said.

India needs to reclaim the market, by allowing Indian carriers like Vistara to fill the gap that Air India, for example, is unable to fill.

AirAsia India - a tie-up between Malaysian low-cost giant AirAsia and Tata - is also fighting for the 5/20 rule to be abolished.

But the opposition, including from established Indian carriers and some politicians, is strong.

Among other things, they accuse Vistara of being controlled by foreigners.

"We are as Indian as any Indian carrier here. Four out of the five board members are Indians, with SIA occupying one seat. Effective control and ownership lies in the hands of Indians," Mr Yeoh said.

The Centre for Aviation's India- based analyst Kapil Kaul said: "The 5/20 rule is very negative and regressive. We don't support such negative regulation... Frankly, I am surprised at the level of opposition to abolishing it. It's a real fight out there."

Mr Yeoh said: "The thinking seems to be that I've gone through the suffering for five years so the start-ups must also go through it. An equal misery approach averaging down to the lowest common denominator is not relevant here."

Despite vehement objections, Mr Kaul expects the government, which is reviewing the matter, to relax, if not abolish, the rule. "I expect Vistara to fly international in the next one year or so," he said.

Whether the ban is lifted today, tomorrow or next year, Vistara is in India to stay, stressed Mr Yeoh.

The airline, which has grown to 900 staff members, nine planes and 12 destinations, aims to hit 20 aircraft by June 2018.

Operating in India has not been a walk in the park and Mr Yeoh is the first to admit that he has made some mistakes, like misreading the demand for premium travel in the domestic Indian market.

The airline has decided to halve the number of business class seats to eight and downsize the premium economy cabin, while adding more economy class seats.

"We are not in a state of denial. We learn as we grow and we will not hesitate to admit we did not get the forecast right. But the important thing is to be nimble enough to make a decision to change," he said.

Running Vistara, "the product of two highly successful iconic brands with a pedigree which is the envy of most, if not all, airlines in India", is a high-stress job, Mr Yeoh said.

He is also acutely aware of the strategic significance of the Indian operations for SIA, which faces real challenges in the premium long-haul market.

The Singapore carrier had tried for almost two decades to enter the Indian market.

Mr Yeoh said: "Vistara is based in a country where the demand for aviation is going to go on a very steep trajectory.

"It is also the playground of the Gulf carriers that have become so successful by essentially siphoning the traffic out of India.

"You can imagine the potential of tapping into this market when we are granted international rights and this becomes a second wing for the SIA group."

Helming Vistara is a once-in- a-lifetime opportunity, a "dream come true", which he could not say no to, said Mr Yeoh, who had to leave his 17-year-old son as well as his wife in Singapore to accept the posting.

Before this, his family had accompanied him on all other assignments, including to London and Los Angeles.

After two years and three months in India, Mr Yeoh, who was part of a 12-member SIA team seconded to help launch Vistara, is not ready to pack his bags.

"It's still too early to talk about it. We've barely started and there are so many things yet to be accomplished. At the very least, I will certainly want to bring the airline to a profitable track.

"As a family, we are trying to make the best of it with regular visits and phone calls. So far, so good," Mr Yeoh said with a big smile.

A version of this article appeared in the print edition of The Straits Times on March 26, 2016, with the headline 'New way to fly'. Print Edition | Subscribe