Vistara popularised premium air travel, and the airline’s rivals now embrace it

Vistara merges with Air India, marking the end of its premium travel era in the Indian aviation industry.

The aubergine-coloured airline, Vistara, flew under its own flight code ‘UK’ for the last time on Monday (November 12, 2024). It will henceforth fly under Air India’s ‘AI’ code, completing the merger of the two airlines ahead of the third anniversary of the erstwhile national carrier’s purchase by Tata Sons in January 2022. Although the airline that brought premium travel back to Indian skies failed to clock profit in the nine years of its existence, it proved to be a test bed for a travel experience that is fast catching on in the post-pandemic world, forcing some operators, including IndiGo, to tweak their business models.

The full-service Vistara made premium travel accessible by becoming the first Indian carrier to introduce the ‘Premium Economy Class’, a sweet spot between the ‘Economy Class’ and ‘Business Class’ — or cost and luxury — in a market that’s dominated by low-cost carriers. It offered 24 ‘Premium Economy’ seats besides eight ‘Business Class’ seats and 126 ‘Economy Class’ seats on its aircraft. The premium class experience offered greater legroom; a fine dining experience; an escort service at airports for women travellers; and priority check-in, boarding and baggage handling.

Moreover, the airline’s boarding music, which comprised music tracks from rock bands Queen and Pink Floyd, singers such as Bob Dylan, and jazz artist Louis Armstrong; diffused mood lighting; and the philosophy of prioritising “customer delight”, including surprise birthday celebrations, at the centre of its business, broke through the clutter, making Vistara a favourite among many.

For Nitin Sarin, 39, a Chandigarh-based aviation lawyer and enthusiast, who travelled either ‘Premium Economy’ or ‘Business Class’ with Vistara, what stood out about the airline were surprise upgrades to ‘Business Class’ at a nominal cost, which was bound to leave a traveller with a sense of thrill and excitement. On Monday, he booked himself on a round trip between Chandigarh and Delhi to savour the Vistara experience one last time before the merger. He has flown 84 flights with Vistara since March 2015. His first Vistara flight was on his 30th birthday with a large group of friends.

Despite its popularity in a niche traveller segment, the airline wasn’t able to clock a profit at any time during its nine years of existence. Between the financial years 2015 and 2024, the airline’s total operational revenue grew from ₹69 crore to ₹15,191 crore. However, as it expanded its network and fleet, its losses after tax and extraordinary items too grew from ₹-199 crore to ₹-1,394 crore. But its margin of losses narrowed down significantly from 288% in the first year of operations to 3.8% in the last fiscal. During this time, Vistara’s promoters, Tata Sons and Singapore Airlines, pumped in ₹10,020 crore over a decade.

“The airline created value for its stakeholders, but failed to create value for its shareholders,” one industry analyst said, on condition of anonymity.

Industry analysts say that while the airline recorded its first quarterly profit in the third quarter of financial year 2023 (the figure was not disclosed by the airline), this happened at a time there was “revenge travel” across the globe post-pandemic, resulting in record passenger demand, allowing airlines to raise airfares the world over.