There’s a lot riding on Phee Teik Yeoh’s shoulders. The 46-year-old CEO of Tata SIA Airlines Ltd has to prove naysayers wrong. He has to show that an airline will not plummet into the red, an all-too-common trend in the Indian aviation sector. He came to India a year ago, set up an office in Gurgaon, indulged in his long-time love of Indian food, and threw himself into preparations for the launch of Vistara, the first full-service airline to start operations in India after nearly 10 years.
The carrier is a joint venture between two reputed global brands—the Tata Group and Singapore Airlines. Vistara, which was expected to become operational in October this year, is still waiting for government clearance, but the launch is imminent, says Phee Teik, a career Singapore Airlines executive and also a Singaporean.
In a telephonic conversation with Forbes India, he talks about his plans to apply his global experience to establish Vistara in a marketplace that has, in recent years, become a graveyard for several airlines. Excerpts from the interview:
Q. You were hoping to launch by the end of 2014. How long before you have the all-clear to take off?
For any startup airline, there are a series of approvals that are required. We are working hard and fast, and have complied with all the requirements. The Air Operators Permit is the final clearance needed after which we will have the licence to begin operations. It should happen anytime now.
With two Airbus A320 aircraft in India, we are operationally ready. It’s been a long journey, but we have had time to prepare. We would like to live up to our brand promise, which is to bring the joy back into flying. The wait has been worthwhile.
Q. Your last posting was as general manager of Singapore Airlines in the UK, which is among the most competitive airline markets in the world. Are there any learnings from that stint that you hope to use here?
Like India, the UK is a very competitive market. The challenge was to be creative and to make sure we got a share of the mind. Emirates was the big boy in the UK, with huge marketing power. It owned a football stadium. In comparison, we were nobody. Emirates (at the time) had 20 daily flights from various points within the UK, while we had just Manchester and London.
Our challenge was to come up with effective campaigns that showcased our product. We were able to make creative partnerships, for example, with Tourism Australia and Disney Channel, to make ourselves heard. When you are up against stronger players, you have to think creatively to get a greater bang for your buck. We had to get market share with a smaller budget.
For about 17 to 18 years, Singapore Airlines was stuck with only three daily flights to London’s Heathrow Airport. The airport is maxed out; slots are coveted by everyone and are tough to get. But when an opportunity arose, we seized it and, after a lot of negotiations, we were able to increase the frequency to four flights a day. Also, we went for an early market share grab, selling in September-October for travel up to June next year.
India is also a very price-sensitive market. We have some ideas on what we can do to stay on top of competition. We have to work with cost-effective channels, but without compromising on share of voice (brand recall and marketing initiatives).
Every country presents a unique opportunity and challenge. Nothing is impossible if you have a good team.
Q. Can you be profitable in India? Isn’t there already more capacity than demand here?
Demand is often a function of pricing. A large number of people in India now have higher disposable incomes; there is more mobility. I feel that demand is something that can be stimulated. Capacity is a function of how much every airline has committed to (when it orders its aircraft). But I don’t believe that demand grows in a straight line. The Indian aviation market is at the cusp of change: It is difficult to predict how fast the growth will be. You talk of demand versus capacity curve. That is impossible to predict, but the demand curve will change. Vistara will create demand where there is none today. We are determined to address the pain points and latent needs of air-travellers in India. There is an unfulfilled need and we will fill that gap.
Q. What is this unfulfilled need that you talk about? You’ve spoken of market research. What does it show?
Correction: This article has been updated with a correction: The 5/20 rule requires domestic airlines to complete 5 years and have a fleet of at least 20 planes before they are allowed to fly.