SIA-backed Vistara considering adding more Boeing jets in India to fight Emirates

A Vistara aircraft preparing to land at Chhatrapati Shivaji International Airport in Mumbai in a July 2017 file photo. Vistara, SIA's Indian joint venture is considering ordering more 787 Dreamliner jets  from Boeing to add flights to destinations as
A Vistara aircraft preparing to land at Chhatrapati Shivaji International Airport in Mumbai in a July 2017 file photo. Vistara, SIA's Indian joint venture is considering ordering more 787 Dreamliner jets from Boeing to add flights to destinations as far away as the USPHOTO: BLOOMBERG

NEW DELHI (BLOOMBERG) - Singapore Airlines is preparing to add planes in India to take on Emirates in one of the world's fastest-growing aviation markets.

Vistara, SIA's Indian joint venture, is considering ordering more 787 Dreamliner jets - whose sticker prices start at about US$250 million (S$337 million) each - from Boeing to add flights to destinations as far away as the US, people familiar with the matter said. The carrier is also mulling over buying more A-320neo-family planes from Airbus, including the longest-range A-321XLR model, they said.

For Vistara, which counts top Indian conglomerate Tata Group as its majority shareholder, the move would be part of plans to loosen Emirates' and Etihad Airways' grip over the lucrative market of flying passengers between India and Europe or the US. SIA has reason to look to India as it faces intensifying competition from budget carriers in its home market of South-east Asia.

As part of its expansion plans, Vistara is also considering buying some of London Heathrow airport's prized slots - which can cost as much as US$70 million each for about two decades - and that may determine the scale of the carrier's plane orders, one of the people said.

While India's aviation market is growing fast, it is notoriously difficult to make money there as fares often sell below cost. Jet Airways India, once the country's largest airline by market value, has been grounded after it ran out of money and the government has been struggling to find a buyer for unprofitable Air India.

Still, international routes have been among the few profitable flights out of India, with Emirates and Etihad leading the way for foreign carriers by accounting for about a fifth of total passenger traffic.

Representatives at Vistara, Boeing and Airbus declined to comment.

Vistara flies only narrow-bodied planes but it has ordered its first wide-bodies - six Dreamliners that are due for delivery by next year. But those jets are not suitable for flights to North America because they do not have a space for crew to rest during 16-hour flights, one of the people said. That would mean that the carrier would need to make costly changes to existing orders or buy new planes with the right configuration in order to fly planes to the US.

Vistara, 49 per cent-owned by SIA and 51 per cent by Tata, started flying in January 2015. India does not allow foreign airlines to fly between local airports, unless they partner a local company to start a domestic airline.

The carrier operates more than 1,400 weekly flights with 39 Airbus and Boeing jets, according to the company, and has a local market share of 5.8 per cent, the smallest among six major players. Tata Sons, the holding company of India's biggest conglomerate, set up Vistara with SIA after an earlier attempt by the two partners in the mid-1990s failed.