Vistara says it recorded first-ever net profit in quarter ended December

Record passenger demand and network expansion to credit

Full service carrier Vistara on Monday announced that it reported its first-ever net profit, excluding unrealised foreign currency loss and non-operating income, for the quarter ended December 2022.

The airline, which recently celebrated its eighth anniversary, said in a statement it was able to break even for the first time in the last quarter, and also crossed the $1-billion revenue mark and remained EBITDA positive in the financial year 2023.

The airline, which is now being merged with the Air India group after its promoters Tata Sons and Singapore Airlines agreed to give the latter 25.1% in the merged entity, welcomed the news of profitability at a time the year-end travel season saw passenger demand exceed pre-COVID levels, and sky-high airfares allowed airlines to improve their revenue passenger kilometers.

The mismatch in growth in air travellers and the aircraft capacity in the market – a large number of aircraft of SpiceJet and GoFirst remained grounded, while IndiGo saw engine delays due to global supply chain issues and Vistara itself witnessed delays in delivery of its Boeing 787-9s due to regulatory concerns by the FAA – allowed airlines to command skyrocketing fares. The airline, however, did manage to add 10 aircraft in 2022, taking its total fleet size to 53 and enabling it to reach a market share of 10.4% as compared with 6.7% pre pandemic.

A factor that also went a long way to help airline reach profitability was its introduction of long-haul flights to London, Tokyo, Frankfurt and Paris during the peak pandemic period between 2020 and 2021, allowing it to reap benefits not just when there were limited number of flight options due to a ban on via travel and closure of Jet Airways, but also when demand returned when India opened its skies fully for international travel in March 2022.

The airline forayed into international flights only in mid-2019, eight months before pandemic curbs were imposed by the Indian regulator. When restrictions eased, Vistara continued to add many routes including Sharjah, Doha and Male, and seven additional routes in 2022, including Jeddah, Abu Dhabi and Muscat, allowing it to grow its international network by more than 180% last year.

“Vistara has benefited immensely from a mix of capacity crunch, revenge tourism and being in the right markets at the right time. Routes take time to mature and Vistara invested in routes which matured as the world came out of lockdowns helping the airline head towards a breakeven. However, there is little clarity on the actual numbers since the airline has itself admitted of keeping out two heads for calculation of these numbers,” said Ameya Joshi, founder of aviation analysis blog NetworkThoughts.