Vistara Airlines is a joint venture between Tata Sons and Singapore Airlines, launched on January 9, 2016, with its main hub at Indira Gandhi International Airport in Gurgaon. The airline faces challenges such as low occupancy rates and competition in a crowded Indian aviation market, while also benefiting from its strong branding, financial backing, and professional leadership. Vistara aims to capitalize on the growing demand for aviation in Asia, but its future profitability remains uncertain as the industry experiences sluggish growth and high fuel costs.

1. (A JV between Tata Sons and Singapore Airlines Limited)
Introduction
Vistara Airlines is a joint
venture between Tata Sons
and SingaporeAirlines
Limited. The airline is
based in Gurgaon with its
main hub in Indra Gandhi
InternationalAirport. The
airlines started its
operation on 9 January
2016. Vistara is derived
fromthe Sanskritword
Vistaar, which means limitless expanse and the word tara, a star, which is depicted in
their logo.
Tata Group was founded by Jamsetji Tata in 1868 headquartered in Mumbai. The Tata
Group comprises of over 100 companies with operations in more than 100 countries,
exporting products and services to over 150 countries. The combined revenue of all

2. the companies of The Tata Group was $103 Billion in the financial year. Tata employs
over 580,000+peopleworldwide.There are 30 publicly-listed Tata companies with a
combined market cap of about $134 billion.
SingaporeAirlines operates fleet of 100+aircrafts including SingaporeAirlines Cargo
and SilkAir destinations, covering a total of 109 destinations in 40 countries.
SWOT Analysis
Strengths
Cleanbalance sheet: Withoutthe baggageof huge losses will help Vistara to churn the
market and take a few risks in terms of pricing and be more imaginative in their
promotions.
MediaAttention: Both Tata and SIA are well known companies thus enabling Vistara
to get the media attention it needs. As branding and advertising is a key strategy to
attract fliers in this sector.
Professional Leadership: Tata is well known and very well respected for its leadership
and values/ethics thus Vistara too will get the leadership and management it deserves.
First One: Tata was the firstcompany in India to startan Airline (Now known as Air
India which was sold to the Govt Of India) thus it has a good history and value
associated with it which will help Vistara to imagine in a better way.
Financial Backing: Tata and SIA are both cash rich companies with good
creditworthiness SIA posted a Net ProfitOf $804.4 million ($568.7 million) in its fiscal
year ended March 31 (2015-16) which proves thefact

3. that both the companies have a good business senseof Aviation business.
Weakness
Conflict Of Interest: Tata Sons also holds 40% stake in Air Asia India which is one of
Vistaras biggestrival thus creating a conflict of interest. Thus it might be difficult to
control two different airlines with different partnerships and objectives.
Low Occupancy Rate: Between January and March the occupancy rate of Vistara was
just53% it did improve to 67% but it is still very low.
PremiumEconomy and Business: Vistara offers 35 per centof its seats on every flight
in the business and premium economy categories. Its seat configuration is: 16
business, 36 premiumeconomy and 96 economy. In contrast, Jet Airways offers just7
per cent of total seats for business category.
The market is dominated by no-frillairlines making it difficult to sell premium product.
Opportunity

4. The following report by IATA (InternationalAir TransportAssociation) shows that
there has been growth in the demand for Aviation in Asia Pacific markets the
following data reveals the growth in Aviation industry in India proved by RPK and ASK
Growth rates. Vistara is operating in India thus enabling them to havea sharein one
fastestdeveloping countries with rising income levels.
Country RPK Growth ASK Growth PLF
INDIA 25% 25.2% 87.5
Explanationof measurementterms:
RPK:Revenue passengerkilometersmeasures actual passengertraffic
ASK:Available seatkilometersmeasuresavailable passengercapacity
PLF: Passengerloadfactoris% of ASKsused.
Threats
SluggishIndianEconomy
Hostile Operating Environment andHighFuel Costs: In India Fuel Costs are25%
higher than global costs and 50% airline operating costis Airline fuel
Competition : India is one of the world’s mostcompetitive aviation markets with
competitors like IndiGo,SpiceJet,Air India etc it is very difficult for an Airline to survive
as price plays a major role in the Indian Marketand only low cost carriers havebeen
able to profit fromthe masses.

5. Poor Performance Of Indian Airlines: Indian carriers arestaring at an estimated
combined loss of $1.3 billion to $1.4 billion in FY 2015.
Conclusion
Vistara is an excellent example of the vision of the TATA Group. The TATAs always
wanted to have an airline of their own after the sale of Air India. Itis too early to judge
if the company will be able to make profits or not as the company is still in the early
growth stage. Most of the TATA Companies are driven by the vision to servethe
people and profits fromthem are justconsidered as a reward for the efforts. Strategic
partnership with SIA willhelp TATA to understand the aviation business at a global
level.