In today\'s fast paced society; evolving at a constant and accelerated rate, the airline industry has a major role to play in inviting investments that caste a wider net to increase global economic developments. The aviation sector works to achieve the task of enhancing the movement of people and goods, creating a network of connectivity across all countries and opening the economy to create a manifold of opportunities and jobs to individuals in all fields such as, marketing, hospitality and finance. \"India’s civil aviation industry is on a high-growth trajectory, aiming to become the third-largest aviation market by 2020 and the largest by 2030.\" (India Brand Equity Foundation, 2017) In a competitive space with a number of airlines of Indian origin being pioneers in the industry, 2014 saw the rise of a new airlines, Vistara in association with Tata Sons and Singapore Airlines. According to Vistara, this joint venture was started by the two conglomerates to further stimulate the demand for air travel. The name Vistara is drawn from the Sanskrit word Vistaar, which means limitless expanse and the word tara, which means, a star, also depicted in their logo. Within a short span of time, it became the newest and fastest growing full service airline that carried the legacy of two iconic brands and recently celebrated the completion of its second year of successful operations. (Vistara, 2017)
2 PEST Analysis
Vistara had to compete in an aggressive environment with a tough competition from various airlines that have been in the industry for decades. With no prior experience, the airlines managed to outshine and exceed customers and stakeholders expectations. They had the benefit of being a new company to their advantage which meant they came in with a clean balance sheet and could afford to take substantial business risks and enhance their image with rigorous but creative promotions.
2.1 Political Environment
There was a recent change in the Indian aviation market making it easier for new airlines to fly overseas. Indian Prime Minister Narendra Modi\'s government presented the national aviation policy to get more cities connected and also, to make flying more affordable, opening the market up to more customers from the middle class sector. Previously, it was mandatory for new domestic carriers to operate for a total of five years with a 20 aircraft fleet to fly abroad, also known as the 5/20 rule. However, under this policy, they were only required to deploy 20 aircraft or 20 percent of total capacity in India, whichever is higher thereby, abolishing the 5 year rule. This change was a boost for Vistara and encourages other foreign carriers to enter the country. (Shah and Wilkes, 2017)
2.2 Economic Environment
Vistara decided not to follow its competition and avoided offering discounts to attract customer attention. The airlines had a low-profile launch with minimal expenditure on advertising. In an interview, Chief Executive Officer of Vistara said, “Besides market forces, our pricing strategy is determined by the value proposition we offer. We are focused on approaching the market differently and this reflects well in all the innovations we are introducing in our product and service offerings.” Vistara tickets cost at least £10 more than those offered by its rivals, according to Regi Philip, who runs Cosmos Agencies, a Mumbai-based travel agency in India. “Vistara is maintaining a lean structure of operations while offering a full-service product. Experts say it is easy for Tata group and Singapore Airlines as they are starting afresh without any legacy cost.” (LiveMint, 2016)
2.3 Social Environment
Vistara is the first full-service carrier in India to introduce premium economy class. Vistara’s 148-seater Airbus offers three separate cabins, with 16 seats in business, 36 in premium economy and 96 in economy class. “The business class demand is directly linked to economic conditions as more than 60 per cent of the aviation demand is estimated to be generated by the corporate sector whose annual travel budgets are linked to business sentiment. People in India do not usually travel by business class for leisure.” (Kaushik, 2015) In a recent interview the CEO of Vistara, Phee Teik Yeoh propagated the benefits of travelling in premium economy. He said, “Economy-class passengers have grown 20% every year, but if you were to study the statistics, business-class travellers have dipped 20% for the last two years. Cost-conscious corporations is a trend worldwide and this is where the premium economy class product achieves both cost-saving as well as comfort at the same time.” (Shukla, 2016)
2.4 Technological Environment
The airline recently introduced their in-flight entertainment system in partnership with BAE Systems bringing the ‘IntelliCabin’ IFE system on Vistara flights. This system allows wireless streaming of preloaded content to the passenger’s personal electronic devices. Currently, all business class customers are given pre-loaded Samsung Galaxy allowing them to access specially selected audio-video content. (Tata.com, 2015).
Vistara Airlines tangible resources can be divided into two main categories: physical resources and human resources. The company\'s physical resources refer to the facilities and equipment owned by it and the human resources refer to the manpower currently employed.
3.1 Physical Resources
According to Kaushik (2015), to be successful, Vistara needed to follow strategies of a low cost carrier that provided certain amenities and luxuries to invite premium gentry. The Indian market is dominated primarily by A320s and 737s, Vistara approached both Boeing and Airbus. Airbus met its requirements, including a leasing company that provided it with a package of 20 aircrafts spaced over three to four years allowing the airline to fly across 18 destinations with thirteen Airbus A320 aircrafts and future plans to receive another seven Airbus A320neo aircrafts by mid-2018. Kaushik (2015) believes that “The airline decided to go for simple leasing instead of the sale-and-lease-back model, which many domestic carriers follow. The airline is controlling other non-customer facing expenses as well, including outsourcing services such as airport handling, IT, engineering maintenance and line maintenance. Most airlines outsource only heavy maintenance whereas line maintenance covers daily checks and handling of spare parts.”
3.2 Human Resources
\"Vistara claims to be “lean and mean,” with an employee to aircraft ratio of 1,200:13\" (Mathews, 2016). Vistara (2017), recognises individual talents and celebrates collective achievements. Each individual at Vistara has distinct expertise, experience and passion that makes the group uniquely diverse and competent. They also provide opportunities to hone these intrinsic attributes by providing an environment that fosters learning, continuous improvement, innovation and thoughtfulness. \"Based on the projected growth of the Indian economy and the low levels of air penetration at present, the aviation sector has the potential to continue to expand robustly. CAPA has developed long term unconstrained forecasts for the growth of the aviation industry in India through to FY2050.\"
We are on a continuous lookout for that spark and a high degree of passion that sets apart the good from the excellent. If you share our philosophy, this is the place for you to build a career with.
margins are wafer thin and in India there is a high cost of doing business,” added Yeoh. “We drive hard negotiations with our vendors who have dealt with SIA before. We have been able to harness good deals even for 20 aircraft.”
3.2 Intangible Resources
Vistara is the first airline in India to offer a value-based frequent flyer programme called Club Vistara, where loyalty points are accrued based on actual spending on fares rather than miles travelled. The airline has done away with the physical loyalty card In other words, a registered Club Vistara member gets points based on the money he has spent on travelling. “The value-based programme is more equitable as the points accrued are directly correlated to the amount spent,” Vistara’s chief executive said. “It’s also more transparent and easier for customers to understand. As evidenced by recent industry trends, there’s an emerging move away from the traditional mileage-based to a value-based scheme.” Rival Jet Airways has a loyalty programme based on miles travelled.
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