Vistara, the Tata-SIA joint venture, announced the signing of a codeshare agreement with German carrier Lufthansa, which will place “LH” code on 18 Vistara flights. Lufthansa operates to Delhi, Mumbai, Bengaluru and Chennai.
Five-year-old Vistara has been on an expansion spree in recent months. While the fall of Jet Airways gave it a boost as the only private full-service carrier in India, its expansion on the partnerships side has been independent and a steady process. The airline has Interline agreements with 22 carriers and codeshare with five carriers. These partners are across alliances and regions.
Interestingly, Lufthansa is one of the founding airlines of Star Alliance and while the airline already has a partnership in place with national carrier Air India on international routes, for the domestic routes the airline has chosen Vistara over Star Alliance member Air India. Remember, Lufthansa supported the admission of Air India into the prestigious alliance.
Against this backdrop, the announcement raised eyebrows since Lufthansa did not go ahead with Air India for a codeshare. There is nothing odd in an Alliance partner co-operating with airlines from another alliance. Qantas – a Oneworld member partnered with Emirates with a hub in Dubai, when Qatar Airways – fellow Oneworld member was in the same geography. Vistara has interline agreements with members of all three alliances as well as independent carriers and has codeshare agreements with members of Oneworld and Star Alliance.
While Air India has placed its code on certain flights beyond Frankfurt to EU and North America on flights operated by Lufthansa, why did Lufthansa choose Vistara to place its code for flights within India? These are the probable reasons
Business Class Product
: While both Vistara and Air India have a business class, the hard and soft product of Vistara is superior to that of Air India. Coupled with streaming in all aircraft, Vistara stands out in experience and upkeep of aircraft. While the distances within the country do not justify a lie flat Business class – which passengers of Lufthansa would experience between origin and point in India, Vistara offers a product and gourmet meals which stand out.
Premium Economy: Over the last few years, Lufthansa has invested in its premium economy product. The airline offers premium economy on its flight to Mumbai from Frankfurt (B744) & Munich (A350), to Delhi from Frankfurt (A380) & Munich (A350), to Bengaluru (B748i) and Chennai (A343) from Frankfurt. In the past, the leadership at Lufthansa has stated that Premium Economy is their “most productive cabin” since it generates 6% more revenue per square metre than Business class.
Air India does not offer Premium Economy as a product and that gives a disadvantage to Lufthansa fliers who would be connecting to destinations within India with a non-consistent product. This would have acted as a major differentiator. Vistara does have 9 aircraft in its fleet which do not have premium economy and as it looks, the 18 flights where Lufthansa would place its code will all be operated by the A320 family which is in three-class configurations.
Economy class service: Air India has moved to a vegetarian-only meal choice in economy class, whereas Vistara offers a meal option between vegetarian and non-vegetarian meals.
Network: Of late, Vistara has grown its network beyond Mumbai and Delhi. However, its prime hub remains at Delhi, from where it connects passengers to a multitude of destinations. As the airline signs more codeshares and interlines, we could look at red-eye flights between Delhi and some existing points in the Vistara network to facilitate connecting passengers and feed its own widebody operations which are expected to start in the next few months.
Air India privatisation: The national carrier is up for privatization soon and with an uncertain future in terms of expansion, no large airline would want to end up in a spot, especially after how leading airlines had a tough time handling passenger when Jet Airways suspended operations. Jet Airways had strong ties with most airlines flying to India in form of codeshare or interline.
Ease of negotiations: While codeshare leads to ease of travel for consumers. There is a lot of give and take for airlines during the negotiations stage which deals with commercials, how the revenue is divided amongst the two carriers – the one booking the ticket and one operating it. A lot of effort goes into handling nitty-gritties like how many seats can be sold across classes by whom and so on. With Vistara – relative a newer airline looking to build its base, it typically would have been easier to tie up with Vistara over Air India.
Lufthansa group comprises of Swiss – which flies daily to Mumbai and Delhi and Austrian – which has operated to India in the past. This deal could pave the way for a similar codeshare with Swiss in future! Will this co-operation expand further when Vistara inducts its widebody aircraft? Singapore Airlines which has 49% stake in Vistara is part of Star Alliance. Currently, Star Alliance does not have two airlines from the same country as its members, likewise, neither OneWorld or Sky Team have two carriers from the same country as its members. Kingfisher Airlines had come close to joining OneWorld, while Jet Airways chose to remain independent. With a market as large as India, every alliance wants a strong partner in India and with Vistara expanding rapidly in the next few years – the alliance would be vying to have Vistara onboard!
