Vistara, the joint venture airline of Tata Sons Ltd and Singapore Airlines Ltd (SIA), may face the cascading effect of an ongoing probe into AirAsia India’s operations. The Central Bureau of Investigation (CBI)-led probe into AirAsia India, in which Tata Sons own a 49% stake, may be forcing the government to withhold permission sought by Vistara to start international flights, two people familiar with the matter said.
AirAsia India is being investigated by the central agency for allegedly lobbying the government for international flight permits and violating rules that prevent foreign airlines from controlling an Indian operator.
According to the people cited above, Vistara had applied in June for rights to start international flights, after it took the delivery of its 20th aircraft, and was hoping to fly out from October. The deadline has now been moved to December, Vistara chief executive Leslie Thng said in July.
“With the general elections coming up next year, bureaucrats may be wary of granting Vistara overseas flight permits in the backdrop of CBI investigating another airline,” one of the two people mentioned above said.
CBI had in May raided the offices of AirAsia India and filed a complaint against Tony Fernandes, chief executive of the company’s Malaysian parent. Fernandes has rebutted the charges.
Airlines were earlier required to fly for at least five years on domestic routes, and have a fleet of 20 aircraft before being allowed to fly international. Now, they can fly just by having 20 aircraft in its fleet or 20% of total capacity (in term of average number of seats on all departures put together), whichever is higher for domestic operations, according to the new civil aviation policy.
Vistara became eligible to fly international in June when it added its 20th plane. The same month, it submitted a list of potential overseas destinations to the government.
However, the civil aviation ministry is yet to clear Vistara’s proposal. “Once cleared, the Directorate General of Civil Aviation will also have to clear the airline to fly international. But, the file hasn’t moved from the ministry yet,” one of the two people mentioned above said.
Civil aviation secretary R.N. Choubey did not respond to an email.
A Vistara spokesperson said, “We await necessary approvals from the authorities and aim to start our international operations by end of this year. Vistara’s expansion plans are on course at present.”
Vistara, which started operations in 2015, has a fleet of 22 Airbus A320s. The airline, which had listed out a plan to fly to destinations like Sri Lanka, Maldives, Thailand and other neighbouring countries, according to reports, may have seen rivals grab some of these routes in recent days.
For instance, GoAir recently launched flights on Delhi-Phuket route, while Jet Airways will start flights on Pune-Singapore route from 1 December. Yet, Vistara is willing to wait it out to begin its international operations, the first person quoted in the story said.
Vistara, in July, announced its decision to order 19 planes worth $3.1 billion from Airbus SE and Boeing Co. It plans to lease 37 new A320neo planes.
The letter of intent with Airbus includes a firm order for 13 A320neo and A321neo jets, as well as options for seven more aircraft from the A320neo family. Another 37 new A320neo-family planes will be added from leasing companies.
The Boeing order includes six firm-ordered 787-9 Dreamliner and purchase rights for four more from the 787 Dreamliner family.
“The aircraft purchase will help Vistara expand both within and outside India and on all routes that this aircraft could support us on,” Vistara’s chief executive Leslie Thng said at that time.
“For medium to long-haul destinations, we decided that Boeing 787-900 (Dreamliner) would be best for us and would allow us to start medium-haul operations from 2020,” Thng had said.
“When India’s third FSC (full service carrier) launched, it did so with its eye on the opportunity in the international market. More than three years later Vistara remains a solely domestic carrier, thanks to Indian regulations,” said CAPA India’s Mid-Year Outlook for FY19. “Although the airline technically qualified to operate international services earlier this year when it inducted its 21st aircraft, it is experiencing delays in securing an international flying permit, which is surprising.”