SIA's Indian carrier resorts to 'buy one, get one free offer' in tough market

Tata SIA Airlines (TSAL), the joint venture formed between Tata and Singapore Airlines (SIA) in September 2013.
Tata SIA Airlines (TSAL), the joint venture formed between Tata and Singapore Airlines (SIA) in September 2013.PHOTO: SINGAPORE AIRLINES

NEW DELHI (BLOOMBERG) - Singapore Airlines' premium Indian carrier Vistara has resorted to free tickets as intense competition and low fares add to the task of wooing passengers.

Vistara, jointly owned by Singapore Airlines and Tata Sons Ltd., filled about 59 per cent of seats on average in the first half of 2015, government data show. That's the least of eight major passenger carriers operating in Asia's third-largest economy. SpiceJet Ltd., which last year offered base fares as low as 1 rupee, filled more than 87 per cent.

Vistara on Aug. 12 offered a free premium economy class ticket - a tier it pioneered in the domestic Indian market - with every business class ticket purchased. Vistara didn't comment on whether the move is aimed at filling more seats.

Given Vistara's three-class configuration of business, premium economy and economy, "it's too simplistic to look at the load factors relative to airlines with a single class, high density configuration of 180 plus seats," Chief Commercial Officer Giam Ming Toh said in e-mailed responses to questions.

Indian companies are already adding Vistara's premium economy as an option in their employee travel policies, he said. Its load factor rose to 71 per cent in May from 53 percent in March, he said, adding the airline's fleet will expand to nine from six in the next three months.

Vistara will continue to see near-term pressure on premium- economy yields, said Kapil Kaul, South Asia chief executive officer for Sydney-based CAPA Centre for Aviation.

"Making premium economy work is critical," Mr Kaul said. "Otherwise, a configuration correction will become necessary."

SIA shares fell 0.7 per cent as of 1:34pm on Monday (Aug 17). The stock has dropped 13.5 per cent this year.