Presented By - Group 5

1. Akshay Srivastava 18PT2-06

2. Ashutosh Sharma A18PT2-33
3. Himanshu Sharma 18PT2-26
Fly the new
4. Lalit Jangra 18PT2-30
5. Raghvendra 18PT2-39 feeling
6. Siddharth Mehrotra 18PT2-49
Agenda

1. About Vistara
2. Aviation Industry
3. Growth and Challenges of industry.
4. Need to come together, Business Case
5. Partner Selection and Assessment
6. Transaction Terms
7. Alliance Management
8. Market Share and Reaction to the deal
9. Way Forward
10. References
- Vistara is a joint venture of Tata Sons Private Limited and
Singapore Airlines Limited (SIA) The company is registered
as TATA SIA Airlines Limited.

- First Alliance/JV: - In 1994 by to purchase stakes in Air

India - No Govt Approval.

- Post lifting foreign investment restrictions (2012) -

received approval.

- Goal - redefine air travel in India to provide seamless and

personalized flying experience with Tata’s and SIA’s service
excellence and legendary hospitality.

- Brand tagline as ‘fly the new feeling’.

- The brand name ‘Vistara’ is derived from the Sanskrit word

‘Vistaar’ that means ‘a limitless expanse’.
 Aviation Industry – Present and Future
● India is expected to become the world’s third largest aviation market by 2024.
● Capacity available in India’s domestic flights, as measured by Available Seat Kilometres, stood at
155,033.4 million kms, while demand, as measured by Revenue Passenger Kilometres, stood at
136,631.4 million kms in FY19.
● Freight traffic grew at a CAGR of 5.32 per cent during FY16-FY20 from 2.70 million tonnes (MT) to
3.33 MT. Freight Traffic is expected to grow at a CAGR of 7.27 per cent to reach 4.14 million
tonnes in FY23.
● Aircraft movement grew at a CAGR of 9.56 per cent from 1.60 million in FY16 to 2.59 million in FY20.
During FY16-FY20, domestic aircraft movement increased at a CAGR of 9.83 per cent and international
aircraft movement expanded at a CAGR of 3.57 per cent.
● The expenditure of Indian travellers is expected to grow to Rs 9.5 lakh crore (US$ 136 billion) by
2021.
● AAI plans to invest Rs 25,000 crore (US$ 3.58 billion) in next the five years to augment facilities and
infrastructure at airports.
● In April 2020, the Government introduced ‘Lifeline Udan’ flights to transport essential medical
cargo to remote parts of the country to support India’s war against COVID-19. Under this scheme,
465 flights were operated by Air India, Alliance Air, IAF and private carriers as of May 05, 2020.
Industry Characteristics
● Untapped Air Cargo Market
● Air Cargo has not yet been fully taped in the
Indian markets and is expected that in the coming
years, it will be one of the largest in world.
● This means build up of capacity by existing
players and entry of new players
● Shortage of airport facilities, parking bays,air
traffic control facilities and takeoff and landing
slots.
● Growth might be hampered because of
unprecneted events and cheaper sea cargo
developments.
● Only 454 airports with less than 100 airports
having more than one daily service.
The Aviation
Industry
Challenges faced
1. Declining yields
○ LCCs and other new entrants together now command a market share of around 46%
○ Legacy carriers forced to match low LCC
○ fares, during a time of escalating costs
○ Increasing growth prospects have attracted & likely to attract more players
○ More players – more competition – lower
○ fares – a continuous cycle
○ The bottom-line – lower yields for all operators

2. Building cost efficiencies

○ Low yield regime to continue.
○ Airlines have to build on their cost efficiencies & drive down costs below the yield that their
product will fetch, to return to profits.
○ For an industry that is estimating losses of US$ 500-550 million by end of current fiscal, this is a
daunting challenge.
3. High input costs
○ ATF prices in India continue to be far higher than global rates, making ATF account for 35-
40% of operating cost, as against global average of 20-25%
○ High basic rates aggravated by high taxes imposed by State Govt.’s
○ ATF cost / kilolitre :
○ US$ 755 in Delhi
○ US$ 780 in Mumbai
○ US$ 455 in Singapore
○ US$ 497 in Dubai
• Tata Sons and Singapore Airlines, decided to fulfil a long-cherished shared dream to bring
forth a distinguished flying experience to air travellers in India.
• Both, the Tata group and Singapore Airlines were also firm believers in the growth potential
of the Indian aviation sector.
• They had tried to enter the market in the past; first, in 1994 by setting up a joint venture to
start an airline in India and then in 2000, teaming up to purchase stakes in Air India.

TATA Group Singapore Airlines

With its strong historical ties with With its excellent service and
aviation, the Tata group had long legendary hospitality, SIA group
wished to re-enter the aviation sector, wanted to enter the expanding Indian
after Tata Airlines was renamed Air market and relaxation in FDI norm
India and eventually, nationalised.  made the alliance possible.
 TATA Group – Selecting SIA Singapore Airlines – Selecting
1. SIA has been ranked as the world's best TATA
airline by Skytrax four times and topped 1. Brand TATA always gives a good start
Travel & Leisure's best airline rankings for and aviation is the sector which TATA has
more than 20 years. incorporated in India.
2. Expertise in Maintenance and repair 2. Catering through TajSATS Air Catering –
services. Another JV with TATA Group and a
3. Portfolio of more than 31 Joint ventures Singaporean company.
and Alliances. 3. Gain of political accesses.
4. Expansion in international flight is easy 4. Gain of knowledge of other hospitality
with SIA. businesses in India through TATA groups
– Taj.
 Partner selection and
assessment

Wanted to start full service airline and target different set of customers
(Other than low cost carrier target audience with Air Asia)
 Criteria Weightage SIA Etihad Relative Remarks

Both are equally capable but JV

Technology 20% 4(airbus) 4 0 would bring the technology for
efficient operation

Singapore airlines is one of the best

Brand 20% 4 3 0.2
operated airlines

Global Relationships
JV to provide access to global
(Such as
customers and routes. Singapore is
global suppliers; 40% 4 2 0.4
global hub so strategically important
global
for international expansion.
customers)

Both have long term relationship

Culture alignment 20% 4 2 0.2
since 1994

0.8 (relative score

with comparison
to Etihad)
Transaction Terms
Equity based joint venture between Tata Sons(51%) & SIA (49%)

Exclusive non-compete agreement signed b/w SIA and Tata and waiver required from other
partner.

Vistara has an exclusive right to undertake "full-service carrier" within Tata group’s aviation
offering.

JV acts as standalone company, without complementing usage from either partners.

Vistara board has one member from SIA, 2 members from Tata group and 2 independent
directors.

CEO is from SIA while rest of executive committee is from Tata group/India.
Alliance Management

Earlier partnership of Tata & SIA has helped to overcome cultural

barriers.

Due to JV nature of alliance, both companies are Indian market focused

and same is reflected in organization structure, infrastructure,
information flows, decision making.

Yearly Review meeting to asses JV health and take relevant actions.

Managing the Alliance

● Tata son’s owns the JV -

SIAL stake of 49% -
Initially board
comprised of 3
members (two from Tata
and one from SIAL).

● Currently the joint venture

has a five-member Board
(Four from Tata and One
from SIAL).

● Major decisions by Tata

Sons.
Market Share of Airlines before Vistara’s entry
Market Share of Airlines After Vistara’s entry
Flying High –
Start- Jun 2015
Jan 2020
Reaction to Deal
Initially, it was seen as full-service airline competing with Air India and Jet
Airways after the void of Kingfisher Airlines.

Focus on westbound - to Middles East, EU and Americas.

Seen as opportunity for passengers, airports and other facilities.

The Tatas will have to walk a tightrope to keep the two ventures in
harmony as there is little differentiation between low-cost and full-service
airlines in India.

"The price differential between the two services is not significant”

(Amitabh Malhotra, Managing Director at investment banking firm
Rothschild and Sons (India)).
Way Forward
1. Continue to the way the brand is providing services., continue the JV, Govt. is
providing heavy inputs in the development of Aviation Sector.

2. Expansion in international segment - Already added flights to Singapore, London.

3. Expansion in tourist destinations – e.g. Leh, Goa - Vistara is able to make its
recognition as luxury flight at low cost.

4. Cargo services is the area which Vistara is not required to enter and to continue
with passenger segment only.

5. Though Covid has deeply affected the tourism and travel but the services and
safety Vistara provides will make the alliance grow even faster.
References
1.https://
www.livemint.com/Consumer/HOiQ4jC4FkCGrEAOB6iVyJ/Tata-Si
ngapore-Airlines-define-roles-in-JV.html
.
2.Wikipedia
3.Business Standard
4.Official websites – Vistara, Tata, Singapore Airlines.
5.DGCA reports and websites.
6.https://
www.thehindubusinessline.com/economy/logistics/vistaras-pote
ntial-air-india-buy-will-be-a-win-win/article30974350.ece
Thank You !!