RUNNING AN AIRLINE in India is a tough job. But a few months into the launch of Vistara, CEO Phee Teik Yeoh looks pretty well adjusted to his daily routine in Gurgaon, where the airline has its headquarters. With Vistara’s operations stabilising and new routes being added, he is putting together the pieces on how to use the might of its parent, the Tata group (Rs 6.7 lakh crore in revenues in 2014-15), to attract fliers.
While this was a given, it’s time the carrier explored this route. Vistara’s new-airline glow is fading. From June to September, its load factor (percentage of seats occupied) has ranged between 59 and 63, the lowest in the industry. Leveraging the Tata lineage, says Yeoh, will be crucial in building a loyal clientele to take on IndiGo and, more pertinently, the full-service Jet Airways. Crucial because just the Tata connection can bring 106 companies on board Club Vistara, its frequent-flier programme.
Many frequent fliers Fortune India spoke to said they had tried Vistara and liked it, but their go-to airline is still Jet Airways or IndiGo—the former because they had accumulated far too many miles on it and the latter because of its flight frequency. Of course, both have a much larger coverage than Vistara’s 297 flights a week. IndiGo has 655 a day. IndiGo and Jet together snag six out of every 10 fliers in India.
Globally, frequent-flier programmes are facing a churn, with airlines weighing incentives against loyalty. Many travellers have moved to low-cost carriers, which rarely run loyalty programmes but whose low-priced tickets make up for the lack of incentives. Many such airlines see loyalty programmes as a cost. But India is on a slightly different curve and Vistara needs a programme that will draw the traffic it is currently losing to competitors.
On the operations side, Vistara has ties with Tata group companies like Tata Consultancy Services. “We have two senior Tata executives [Prasad Menon and Mukund Rajan] on our board as chairman and member. They are actively involved in helping us grow,” says Yeoh.
A few tie-ups for fliers have already been put in place. Those who fly Vistara and stay at Taj group properties get extra points added to both their Taj and Vistara loyalty programmes. Similarly, a package deal launched with Taj Holidays and Vivanta offers Vistara fliers a hotel stay in Delhi along with the flight. The airline has a deal with Croma, the electronics retail chain run by the Tata group, offering a 5% discount on transactions of Rs 10,000 and above.
Vistara’s loyalty programme is different from that of most other airlines, with points accruing on the ticket price rather than the distance travelled. From a Tata perspective, this could also trigger a game-changing, group-wide loyalty programme, although that’s for the long haul.