Prolonged suspension of international flights impacting airlines' financial health: Vistara

In October, domestic air traffic rose 70% year-on-year to 89.85 lakh passengers, as per the latest DGCA data.

As the pandemic clouds slowly clear, Vistara on Sunday said a prolonged suspension of scheduled international flights to and from India is impacting the financial health of most airlines and also cautioned that it might be too early to conclude that the country’s aviation sector is out of the woods.

The full-service carrier, which started flying to eight international destinations during the pandemic, has embraced a "nimble" approach amid the dynamic and unpredictable situation in the wake of the coronavirus pandemic as some countries are now witnessing rising infections.

Vistara CEO-designate Vinod Kannan said most predictions about recovery of the aviation industry have been proven wrong in these times of great unpredictability, and it might be too early to say that the Indian aviation industry is completely out of the woods.

On the domestic front, air traffic is nearing pre-COVID-19 levels and grew 70% in October compared with the year-ago period.

"A prolonged suspension of scheduled international operations is definitely impacting the financial health of most airlines, thereby adding to the pressure (on the revenue)," he told PTI.

In an email interview, Mr. Kannan, who is currently the airline’s chief commercial officer, said that though administration of vaccines across the globe has brought a lot of positivity and hope to the industry, the situation continues to be dynamic and unpredictable.

With continuously evolving travel restrictions in different parts of the world, "recovery of demand in international segment still has a long way to go", he noted.

Scheduled international air services to and from India remain suspended since late March 2020 due to the pandemic. India has air bubble arrangements with more than 25 countries for operating overseas flights.

For now, the suspension is till November 30 and there is no clarity on normalisation as discussions are going on against the backdrop of spike in the number of coronavirus cases in some countries.

Earlier this week, Civil Aviation Minister Jyotiraditya Scindia said the "process" is being evaluated with respect to normalising overseas flight services.

During the pandemic, Vistara started flights to eight international destinations—London Heathrow, Dhaka, Dubai, Doha, Frankfurt, Sharjah, Malé, and Paris.

"The momentum we have gained in this period on the expansion of our international footprint has been rewarding, helping us introduce our product to new markets and cementing our brand presence to help us prepare for the restart of scheduled international operations," Mr. Kannan said.

According to him, Vistara is observing an increase in preference for direct, non-stop flights on medium and long-haul routes, which gives impetus to its growth plans in the international market. "Despite the ongoing challenges, we continue to stay firm on our long-term expansion plans".

Mr. Kannan, who is to take charge as CEO from January 1, 2022, pointed out that certain international routes continue to be viable for operating special flights as part of travel bubble agreements as this provides flexibility but with largely limited opportunities to scale up.

However, he did not respond to a question on international airlines’ body IATA recently saying that India’s air bubble arrangements are not driven by the pandemic but the desire to renegotiate its air services agreements.

"We see great potential for long-haul direct flights from India, and therefore, we have been steadily growing our global network under travel bubble agreements with a series of additions to our network," Mr. Kannan said.

Regarding starting flights to the US, he said operations to the US have several requirements and approvals that "we are currently working on".

"We aim to keep up the momentum that we have gained in the last one year on international expansion and have our plans in place to add 10-12 destinations to our network as soon as we can," he added.

Without sharing any specific numbers on the growth in yield and revenue as well as in passenger volume in the first half of the current fiscal, Mr. Kannan said the first few months were extremely tough.

Just when the industry had started seeing a marginal increase in passenger volumes, the second COVID-19 wave brought it down significantly with passenger load factors averaging around 50 per cent in April and May 2021, he said.

Further, he said that only since June 2021 that we have started observing a return of demand which led to the load factors going up to 72.4 per cent in September.

"We have also been able to effectively leverage commercial cargo and charter flights which has significantly contributed to the bottom line," Mr. Kannan said.

With the ongoing festive season and year-end holidays coming up, he said Vistara was hopeful that passenger traffic will continue to rise and normalcy returns gradually.

In October, domestic air traffic rose 70% year-on-year to 89.85 lakh passengers, as per the latest DGCA data.

On expenses, Mr. Kannan said Vistara has been nimble in its approach from the beginning and took several measures to reduce non-customer facing operating expenditures while making every effort to conserve cash wherever possible.

The airline, he said, continues to leverage opportunities such as commercial cargo, charter flights, and introduce multiple ancillary services in our effort to generate additional revenue.

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