Forbes India 15th Anniversary Special

5/20 rule is holding back Indian aviation, says Vistara CEO

The airline, a JV between Tata Sons and Singapore Airlines, completes a year of operations on January 9. While upbeat about growth, its CEO Phee Teik Yeoh strikes a cautionary note over the country's flying policy

Published: Jan 9, 2016 06:09:34 AM IST
Updated: Jan 5, 2016 05:56:49 PM IST
5/20 rule is holding back Indian aviation, says Vistara CEO
Image: Amit Verma

Name: Phee Teik Yeoh
Prior to joining Vistara, Phee Teik spent over two decades with Singapore Airlines
B.Sc in chemistry from the National University of Singapore
Golf, contemporary music and cooking

Q. Have there been any major disappointments in your first year of operations?

It is a well-recognised fact that high cost of operations and low margins have been the bane of Indian aviation. Ease of doing business is another major element that is missing. While we appreciate that the aviation policy is under review, the existing policy is restrictive and not relevant in the current business context. However, we took the challenges in our stride, overcame them with steely resolve and the will to succeed. We did not allow the roadblocks to daunt our spirit and our objective to give travellers a flying experience like never before.

Q. There are reports that you are looking to re-configure your fleet and might even remove the business class section.
Our aim is to provide a seamless and personalised flying experience to our customers from all strata and we believe that our three-class configuration (business, premium economy and economy) is helping us offer it. We plan to stay true to our strategy of a full-service airline while, at the same time, we observe the market dynamics. We constantly review how we can better match supply with demand and that includes our seat configuration too. While we have noticed an encouraging uptake of our business and premium economy class products, we are prepared to reduce the seats in either or both cabins if the market dynamics are unfavourable. Any change in seat configuration will also depend on our route network plan, which, to a certain extent, will be influenced by the upcoming aviation policy.

Q. You have very strong views on the 5/20 rule. How important is flying international to Vistara’s growth?
The 5/20 rule, which requires a domestic airline to have a fleet of 20 aircraft and operational experience of five years to fly overseas, impacts not only Vistara, but it is one that holds back unleashing the true potential of Indian aviation. There are no global parallels to the 5/20 rule and the regulation is discriminatory to Indian airlines. Foreign carriers that do not meet these criteria are allowed to operate in Indian skies, but domestic airlines cannot enjoy reciprocal rights. So the industry needs to be in conjunction with the fact that the abolition of 5/20 will not favour any particular airline, rather it is in the national interest, Indian travellers’ interest and the interest of all players in the sector. Indian carriers are best placed to promote India as a tourism destination and should be encouraged to provide international connectivity.

Q. What is Vistara’s five-year roadmap?
Given the dynamic operating environment and the surge in passenger growth that experts foresee, we are geared up to expand our footprint and strengthen our value proposition. Our strategy is focussed on steady and measured growth. Today, we have nine aircraft and serve 12 destinations with 307 flights a week. In 2016, four aircraft will be added. With that we will introduce new destinations and increase frequencies. By 2018-end, we will have a fleet of 20 Airbus aircraft. We also look forward to a progressive aviation policy that will allow us to fly overseas.

(This story appears in the 22 January, 2016 issue of Forbes India. To visit our Archives, click here.)