India does not have 'Genuine' Low-Cost Carriers (LCC)

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India does not have 'genuine' low-cost Carriers (LCC) as there are no budget terminals in the country. Low fares advertised by LCCs are mainly 90-day advance fares and very few can actually plan their trips so far in advance, Tata-Singapore Airlines JV Vistara chairman Prasad Menon told TOI in a freewheeling interview. The Tata Group insider sounded a word of caution that Gulf Airlines are ruling Indian aviation and that the government must make it easier for new Airlines to fly abroad to counter their dominant role here. Excerpts:

With very little fare variation, what is the difference between full service Carriers like Vistara and LCCs in India?

The basic premise of an LCC is that it operates from a budget terminal that does not exist in India as of now. The low fares they advertise are mostly three-month advance schemes. Flash sales do not make them viable. There is not much difference in spot fares (of FSCs and LCCs). India needs budget terminals that are efficient and from where all Airlines, not just LCCs, can operate. We don't need fancy Airports. The Airport charges here are very high.

Has cut-throat competition forced Vistara to taper fares? Also, since the Airline had low occupancy in early days?

We started with a certain fare level to test the waters. We have come down by 10% to 15% from that. But we are not going to be the cheapest in the market as we offer a level of service that is setting standards. We are Rs 1,000-1,500 higher than the lowest fare. Vistara economy is Rs 600 to Rs 1,000 higher than LCCs. Our economy is doing very well with almost 80% occupancies.

How is the government's ambivalence in deciding on new norms for Indian Airlines to fly abroad affecting your plans?

Gulf Carriers are ruling Indian aviation. Flyers from here travel between India and the world through Dubai, Abu Dhabi and other hubs in the Gulf. The 5/20 rule (that an Indian Carrier must be five-year old and have 20 planes to go abroad) must go. We will need 15 to 18 months (to launch overseas flights) when 5/20 is replaced. Indian Carriers can regain the market of overseas traffic from foreign players.

Vistara's premium economy has had a mixed response. Is there a rethink on it?

This product will stay. There is a big market for it as many corporates are still flying economy (business travel was clamped down during the downturn) and this is a good product for them. Many leisure travelers also want to pay marginally more for a lot more comfort.