India's newest airline eyes October launch

India's newest airline eyes October launch
By admin


India's newest airline says flights could begin in October, and that it's "bullish" about the future even as a rival carrier reported a big loss.

The new airline, to be called Vistara – a Sanskrit word meaning "limitless expanse" – is 49% owned by Singapore Airlines, while the Mumbai-based Tata conglomerate controls 51%.

The airline will offer business and economy classes, chief executive Phee Teik Yeoh told reporters in New Delhi, and hoped to start flying passengers "sometime in October", subject to approval by India's Directorate General of Civil Aviation.

The previous Congress government began allowing foreign airlines to buy up to 49% stakes in Indian carriers in 2012.

India's air passenger market has expanded at breakneck speed but many companies are laden with debts and beset by cutthroat fare wars, high fuel costs and shoddy infrastructure.

India's second-biggest carrier by passengers, Jet Airways, in which Abu Dhabi-based Etihad Airways owns a 24 per cent stake, reported last week that it lost 2.2 billion rupees ($A38.8 million) in the three months to 30 June.

To help stem losses, Jet announced it was abandoning its low-cost JetLite brand to focus on its full-service business as it gears up for battle with Vistara in the higher-paying segment.

"We welcome the Tata-Singapore airline to India. It will help us stay slim and not drop our guard," Jet chairman Naresh Goyal told a news conference.

Jet separately "vehemently denied" in a statement reports that it had received an ultimatum from pilots threatening labour action if salary arrears were not settled.

It said management would meet the pilots on Wednesday to discuss "all matters".

Jet narrowed its losses from the 3.55 billion-rupee loss Jet reported in the same quarter a year ago after it cut financing costs, but the performance underscored entrenched problems facing the sector.

The Centre for Asia Pacific Aviation consultancy estimates the industry will lose up to $US1.4 billion ($A1.51 billion) in the financial year to March 2015 after losing $1.7 billion in 2013-14.

IndiGo, India's largest passenger carrier, is the sole airline among the four biggest operating to consistently report profits.

Kingfisher, another full-service airline owned by liquor tycoon Vijay Mallya, was grounded by huge losses in 2012.

But Yeoh projected a strong future for the new carrier, thanks to India's fast-growing middle class.

"The Indian aviation sector is on the cusp of change," the Vistara CEO said, adding that the company was "very bullish about the future" because of low air-travel penetration in the country of 1.25 billion.

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