SIA-linked Vistara dangles free tickets to woo passengers

Singapore

AMID tough competition, Singapore Airlines' India-based joint venture Vistara is throwing in a free ticket with the purchase of every business class seat bought as it seeks to attract more passengers.

The new entrant to India's aviation sector, which took to the skies in January this year, is offering the sweetener of a free premium economy class ticket for every business class ticket that a passenger purchases under a promotion that was launched last week. Vistara is a joint venture between SIA and India's Tata.

According to a Bloomberg story citing data from the Indian government, Vistara filled about 59 per cent of seats on average in the first six months of this year, which is the lowest of the eight major Indian airlines. The carrier flew about 71,500 passengers per plane in their fleet during the first half of the year

SpiceJet filled over 87 per cent while IndiGo, Jet Airways and Go Air were all above the 80 per cent threshold. AirAsia India, also a Tata-backed joint venture, averaged a load factor of over 70 per cent. Tata is seeking to boost its stake in the no-frills carrier to some 41 per cent, up from 30 per cent currently,

However, Vistara's load factor reportedly improved to 71 per cent in May, up from 53 per cent in March, as its premium economy product gained favour with Indian firms.

SIA officially launched its own version of premium economy recently starting with Sydney, with plans for the product to be introduced on other medium/long haul routes progressively.

Meanwhile, SIA is reportedly still keen to tie up with and invest in Northeast Asian carriers, despite talks with South Korea's budget carrier Jeju Air recently falling through. According to a Reuters report, the airline is said to be turning its focus to China, as it seeks to leverage on the domestic market in the populous country, which could include codeshares. China Air is seen as a suitable fit by analysts, since it is also part of Star Alliance, although Cathay Pacific owns a stake in the airline which could make tying up with SIA tricky.

The SIA group has been seeking to build alternate hubs - such as in Delhi through Vistara and in Thailand through NokScoot - to spread its wings amid cut-throat competition, especially from the Gulf carriers. It has also been inking code-share agreements and other strategic partnerships with carriers such as Turkish Airlines.

Separately, SIA released its passenger operating numbers for July on Monday. The parent airline's passenger carriage edged up 2.1 per cent year-on-year as capacity was scaled back 1.5 per cent. This nudged load factor (PLF) up 2.9 percentage points to 84.6 per cent. But the carrier warned that the competitive landscape remains challenging, with the growth in passenger carriage supported by promotional activities in key markets.

Regional wing SilkAir's passenger carriage jumped 16.5 per cent thanks in part to the Hari Raya/Lebaran holidays and summer peak travel period, outpacing a 10.6 per cent injection of capacity, as new routes such as Denpasar and Cairns were launched in recent months. This pushed up load factor 3.8 percentage points to 74.3 per cent.

SIA's long haul budget arm Scoot reported a 12.7 per cent growth in passenger carriage year-on-year, narrowly edging out an 11.8 per cent increase in capacity. This resulted in a PLF of 84.8 per cent. The budget carrier now operates to 15 cities, after launching scheduled services to Osaka in July.

Short-haul low cost carrier Tigerair recorded a 3.3 per cent improvement in passenger carriage while capacity was kept virtually flat. As a result, PLF increased by 2.7 percentage points to 85.3 per cent.

However, on the cargo front, cargo load factor slid 4.1 percentage points to 58.4 per cent as cargo traffic (measured in freight-tonne-kilometres) dropped 5 per cent against capacity growth of 1.6 per cent. Most route regions saw lower loads amid softer demand.

Shares in SIA closed at S$10.01 on Monday, down nine cents.