For the past many weeks, we have seen a contest for the spoils of Jet Airways. Many airlines are in the game. Jet Airways has already lost 61 airframes, and another 15 are on their way out. For reference, in December 2018, they had 119 aircraft in their fleet, including their 777s and A330s.

SpiceJet has already taken a few of these aircraft and is expected to take a total of 40 Boeing 737 aircraft to expand its network across the country. Vistara has dibs on another 10 of these aircraft, and Air Asia India is also considering adding the 737 to their fleet. All of these moves do not leave too many of the NG variety of aircraft to be placed outside India. The quest for aircraft was based on the fact that the Jet Airways slots being given out, are going to be correlated to new capacity being brought on board by the airlines.

Of course, all these airlines are fighting for the spoils for domestic dominance, and to an extent, regional dominance. Here is how various airlines have filled up the gap left behind by Jet Airways in the days after the shutdown of Jet Airways.

• Vistara and AirAsia India were the first to add flights.
• SpiceJet is adding flights out of Mumbai.
• IndiGo announced additional flights from Mumbai Terminal 2.
• IndiGo expanded their presence at Mumbai’s & Delhi’s Terminal 2
• SpiceJet launched additional flights from Mumbai and Delhi’s Terminal 2.
• GoAir also added routes from Mumbai and Delhi Terminal 2.

However, only one airline, Air India, came up, albeit, with a half baked plan to take over Jet Airways long-haul assets. Just yesterday, Air India, after soul searching or a chat with God decided they could not take over the 777 aircraft of Jet Airways because of the incompatibility with their existing product. I think Air India’s criteria is the plane needs to be broken enough to be flown by Air India’s crew.

If you had a good look at Jet Airways’ accounts, one thing that they did well over the years, however, was to focus on the international operations of the airline, which over the years got them about 55-60% of their revenue. The good part, a lot of this was forex revenue, which helps because aircraft lease and expenses at stations abroad are all paid for in the US Dollar. So, an airline needs forex revenue.

I kept wondering why did no one pounce on this opportunity that is created. The international break is an interesting one. There is a moat. You need traffic rights, which the government negotiates, to operate flights abroad. So, it is not just slots, but the number of seats that can be flown, which are in the contest. While none of the flying rights of Jet Airways, to fly abroad, have yet been given away, once these rights go away, they are not coming back.

So, there is a considerable opportunity for Indian airlines to take over the rights, for instance, to fly to London or Paris, and be the Indian carrier operating the flights to take Indian population abroad. Air India is there, has the rights, but practically cannot create an experience. So, that game is open for another carrier to take on. However, I did not have to wonder for long.

Vistara Boeing 777 play

Just this morning, the Business Standard reports, that Vistara is having a hard look at not only taking on some aircraft for domestic operations, but also at a large chunk of the international fleet of Jet Airways. Per the report:

As part of this plan, the group’s full service carrier Vistara is considering acquiring 16 planes of grounded Jet, including 10 Boeing 777 aircraft.

The airline is also planning to induct at least three single-aisle Boeing 737 planes of Jet Airways. Getting a few Airbus A330, wide-body planes, is also part of Vistara’s plans.

To me, the number of 737 aircraft being inducted looks small, because Vistara also seems to want to have a decent network now, and three 737s don’t make any sense to get there.

Vistara does have 6 Boeing 787-9 aircraft on order, and the first one will only arrive early 2020. Vistara tried to get an earlier slot, but with the 787 being such a hit, Boeing could not bring on the deliveries any further.

Now that Vistara has their permit for flying abroad, it would be interesting to see their moves from here on. The earlier plan was for Vistara to fly from Delhi to Colombo. But with the war footing with which the airline is working on these days to expand its foothold, and rightly so, many plans will change.

Traditionally, Indian carriers have started with international flights on their narrowbody aircraft and then gone into the widebodies. Could this opportunity present itself to Vistara where they could jump on flights to Europe before they jump on flights to Colombo? We will see.

Also, it would be interesting to see what Vistara would do with the 777s if they take them on. The Jet Airways 777 and A330s are two different products in Business Class, and the Jet Airways 777s also have a substantial first-class suite which usually does not sell.

Bottomline

Vistara is in the sweet spot right now, and I hope they’ve done all their modelling internally and are ready to leap into international flying. Long-haul flying is a tremendous opportunity for Indian carriers, as the price sensitivity is less, and hence more chance to make money.

What do you think of Vistara’s new moves on the Jet Airways’ 777s?