The problem with ​Vistara’s plan to go for all-economy class planes

Vistara has said it is serious about inducting an all-economy narrow-body aircraft into its operations in the near future. A full-service carrier with no business class? The news set tongues wagging.

While the aviation market received the proposed change in tactic as a fresh development, truth is the airline inducted a A320neo (VT-TNN) in an all- economy configuration. Initially, the aircraft was flying on the Delhi–Kochi sector; it now operates a double-daily flight to Ranchi and a single-daily one to Udaipur from Delhi.

Vistara’s change of tack has triggered a debate about the viability of the model in a country where 82 percent of domestic market share lies with low-cost carriers (LCCs). Parallels were drawn with Kingfisher and Jet Airways — both serving a stark reminder that they are not in operations anymore.​​

Since inception, Vistara has been struggling to get the right mix for its aircraft. The airline started with 16 Business Class, 36 Premium Economy and 96 Economy class. Within a year of operations, the airline started re-configuring its aircraft to 8 Business, 24 Premium Economy and 126 Economy class seats.

In 2018, the airline placed orders for additional narrow-body aircraft along with B787-9 Dreamliner wide-body aircraft. The twist in the tale came in April 2019, when Jet Airways suspended operations. All airlines in India have a large order book, except Air India. Yet, the government linked the additional slots distribution to immediate induction of additional aircraft. Spicejet became the biggest beneficiary of the same and inducted 30+ aircraft to get additional slots. While GoAir and IndiGo did not change its business plans, Vistara did and inducted 9 B737s which earlier flew for Jet Airways - as a stop-gap arrangement to get slots. Going by the airlines' in flight magazine for this month, two of the nine aircraft will be out of fleet this month.

Currently, the airline has three class A320s, dual class B737s and a mono class A320 in operations. When the A321 is inducted, it will have another configuration due to its larger size.

Vistara also has the economy Lite fares, wherein patrons have to purchase meal on board, creating confusion. A similar confusion was created with the upgrade vouchers for the flights operated by the B737 series. Since they are dual class, the airline permits an upgrade with two upgrade vouchers instead of one.

Having a sub-fleet is not an experiment any more. World over, airlines have the same type of aircraft configured in different seating configurations to match the demand to the market. Kingfisher Airlines operated a premium heavy A321 with 32 business class seats between Mumbai and Delhi. Likewise, Jet Airways operated multiple sub-fleets in the past.

India is different and difficult! The unique Route Dispersal Guidelines, makes the route dynamics complex and puts a strain on the balance sheet. Not always does an airline find Business Class and Premium Economy class passengers on routes to Guwahati, Bagdogra, Dibrugarh or other points in the northeast, especially because there is overcapacity in the markets – thanks to airlines being forced to operate flights as a percentage of their metro route deployments.

An all-economy aircraft helps mop up additional ASKs (Available Seat Kilometres) on Category II and IIA routes by plying an all-economy aircraft and helps compete effectively with LCCs on such routes, where it is presumed that the loads in the front cabin are not sufficient. India is a cost-conscious market and non-metro routes are even more prone to cost fluctuations. This reducing the Business class and premium economy class, could also help the airline have a larger capacity share in these markets and help gain a little edge over competition, helping it to price competitively.

However, this is fraught with risks. Vistara is now becoming a chosen airline in India for foreign FSCs operating in India. From equity partner Singapore Airlines to Lufthansa, and British Airways to JAL – the airline is getting into a code share and interline agreement with multiple players across the globe.

Globally, airlines have a sub-fleet, but it is easier in Europe where the Business class section is essentially the same seats with the middle seat empty and full meals inclusive. American Airlines, for example, operates the A321 in five different types of seating configurations. There are not many airlines which have a three-class service in Asia, but Air India has a couple of aircraft in all-economy configuration and so did Kingfisher Airlines

Vistara is blessed to have a strategy and planning team, which has access to the best of TATA and Singapore Airlines. However, both Kingfisher Airlines and Jet Airways weren’t different.

They had some of the best aviation consultants in the world at their disposal. With the confusion in seating and business model, there were cases of Kingfisher Airlines having two back-to-back flights on high-frequency route between Mumbai and Delhi being operated by a dual class and mono class aircraft, leading to confusion.

When both these airlines moved to a mix model of LCC and FSC, there have been cases of onward flight being FSC and return being LCC creating more confusion in the minds of the people. Vistara is not trying any of this, thankfully.

Yet, after experiments with seating configurations – Jet Airways and Kingfisher Airlines returned to a single type of seating – dual class, same across the fleet. For both Jet Airways and Kingfisher, it was too little too late, so the Indian market hasn’t seen the benefits of the re-configuration.

Having such a sub-fleet does put a strain on operations, if not managed judiciously. There are times when you have delayed aircraft rotations, but inability to swap to an all-economy aircraft because it leads to experience downgrade and these tend to happen more when the airline has to start sending aircraft for “C” and “D” checks.

The last problem that the airline will have to manage is to differentiate from what Jet Airways and Kingfisher Airlines did – having a mono class flight in the morning and a dual or three class in the evening, creating confusion in the minds of passengers!

While it takes time to get the configuration right, it should not be an eternal process!

Ameya Joshi is the founder of aviation analysis blog NetworkThoughts. Ameya writes a lot on aviation. You can catch all his columns here.