Vistara commenced its flight operations back in 2015, for this reason we can call this airline a newcomer in the world of aviation. As Vistara expands internationally, the question arises – does it need the support from an alliance? Which one would be the best for the business model of Vistara?
Benefits or drawbacks
One of the main benefits that airline alliances provide is the help for carriers to grow, particularly a smaller one such as Vistara. If the airline joins on of the Big Three alliances it would be able to book passengers on hundreds of new routes and gain access to major hubs along with technical assistance (check-in, baggage transfer, maintenance, etc.). Passengers would feel benefits as well due to new connections and more frequent flights.
The new traffic would support Vistara’s revenue on international routes.
The new traffic would also help fill Vistara’s planes, boosting its revenue on international routes. By joining an Alliance Vistara could expedite its growth by adding flights to hub airports and feeding into connections. The carrier has already signed codeshare agreements with five carriers, giving it a taste of the benefits of being in an alliance.
Although, the airline has codeshare agreements with five airlines, stepping into the unknown is risky too. Since Vistara is not yet a dominant carrier, it could lose market share to the more renowned carriers.
Currently there are the three biggest airline alliances: Star Alliance, oneworld and SkyTeam, any of which Vistara could join. The question arises, which one Vistara should enter.
For now this airline has codeshare agreements with British Airways and JAL that belong to oneworld and Lufthansa (LHAB) (LHA), United, and Singapore Airlines (SIA1) (SINGY) belonging to the Star Alliance.
As it has the most partnerships with the Star Alliance, it should be remembered that Singapore Airlines (SIA1) (SINGY) owns 49% of Vistara. Knowing that airline ownership influences alliance choices, a partnership with Star Alliance is the most likely to occur.
Competition between two domestic carriers?
The main competitor for Vistara will be Air India since it already is the member of the Star Alliance. Moreover, the carrier also offers routes to Europe and Asia. For now, Vistara has to focus on growth, in order to become a stable carrier to avoid losing against Air India in the future.