SIA-backed Vistara considers adding to Boeing fleet in India

A 787 Dreamliner operated by Singapore Airlines. 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 destinati
A 787 Dreamliner operated by Singapore Airlines. 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. PHOTO: LIANHE ZAOBAO

NEW DELHI • Singapore Airlines (SIA) 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 may also buy more A320neo-family planes from Airbus, including the longest-range A321XLR model.

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

As part of its expansion, Vistara may buy some of Heathrow Airport's prized slots - which can cost up to 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 hard 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, global 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.

Vistara flies only narrow-bodied planes but it has ordered its first widebodies - 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 space for crew to rest during 16-hour flights, one of the people said. That would mean the carrier having to make costly changes to existing orders or buying new planes with the right configuration in order to fly to the US.

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

The carrier operates more than 1,400 weekly flights with 39 Airbus and Boeing jets, 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.

BLOOMBERG

A version of this article appeared in the print edition of The Straits Times on January 24, 2020, with the headline 'SIA-backed Vistara considers adding to Boeing fleet in India'. Print Edition | Subscribe