NEW DELHI (BLOOMBERG) - Singapore Airlines (SIA) just picked a fight with Emirates in a grab for India's international travelers, and a slice of one the world's fastest-growing aviation markets.
SIA's unprofitable Indian venture, Vistara, launched its first overseas service between New Delhi and Singapore late on Tuesday (Aug 6). It's the start of an uphill battle against Middle East airline giants, led by Emirates and Etihad Airways, that dominate India's offshore routes.
For SIA, ambushed all over South-east Asia by budget airlines, the prize is clear. The number of passengers in India will more than triple to 520 million by 2037, the International Air Transport Association says. And of the 63 million people that flew to and from the country last year, two thirds were carried by foreign airlines.
Vistara's maiden offshore flight is due to touch down at Changi airport early on Wednesday.
Vistara, 49 per cent owned by SIA and 51 per cent by Indian conglomerate Tata Group, started out in January 2015. India doesn't allow foreign airlines to fly between local airports, unless they partner with a local company to start a domestic airline.
The carrier operates 30 Airbus and Boeing jets and has a local market share of 5 per cent, the smallest among six major players. It also plans to fly to Dubai and Bangkok. According to the CAPA Centre for Aviation, Vistara could break even in the year ending March 2020.
Vistara is a key element of SIA's multi-hub strategy, and the launch of international operations offers additional opportunities to it, a spokesman for the South-east Asian carrier said. He declined to comment on competition. A representative for Vistara referred queries to SIAlines, while Emirates declined to comment.
Still, airlines from the Middle East have history on their side. They've traditionally flown westbound Indians to Dubai and Abu Dhabi on ultra-cheap fares, before putting them on a flight to Europe or North America. Emirates, often dubbed the "unofficial national carrier of India," controlled almost 15 per cent of the market to and from India last year, regulatory data compiled by Bloomberg showed.
The fares offered by low-cost airlines in India's notoriously price-sensitive market are another challenge for SIA. A Vistara flight to Singapore from New Delhi on Aug 28 costs 17,379 rupees (S$337), according to online travel agent Makemytrip.com. In comparison, AirAsia was offering a flight at less than half that price, at 7,745 rupees, albeit with a stop in Kuala Lumpur.