Crisis at Vistara: Is a harsh summer on the cards for Indian passengers?

Vistara, the country’s third-largest air carrier, hit a snag of “crew unavailability” in the first week of April, forcing the Gurugram-based airline to cancel many domestic flights. The issue, which has been simmering for some time, will have significant ramifications for the local aviation industry, apart from causing major inconveniences to its passengers, at least over the next few weeks.

The root cause of the Vistara crisis lies in the airline’s inability to reach an agreement with its staff over the new pay structure ahead of its merger with sister concern Air India. According to sources, the restructured pay package that guarantees pilots a minimum flying of 40 hours a week instead of the earlier 70 hours would have resulted in a significant reduction in pay. This caused discontentment, especially among pilots. Pilots were required to accept the new pay structure by March 15.

With the crew seeking sick leave en masse, Vistara had no choice but to cancel its flights—dozens in some days. It dropped its on-time performance (OTP) to 51%.

A similar incident occurred during the Air India-Indian Airlines merger in 2007. The operating models of airlines, according to industry experts like Rajat Sharma, CEO of Sana Securities, are a major cause of flight delays and mass cancellations in India. “Airlines are operating at wafer-thin margins. In most cases, they have minimal crew. So, even when a handful of the crew members don’t show up for duty, their schedule gets disrupted,” he says.

Meanwhile, the Vistara management claims that the airline has managed to control the situation. CEO Vinod Kannan announced on April 6 that 98% of its pilots have signed the new pay contract. “We are addressing this on a war footing. Hence, we are continuing to hire more pilots and are also carefully scaling back our operations slightly to provide the much-needed resilience and buffer in the rosters,” Kannan said in a statement. “We have also deployed larger aircraft like our B787-9 Dreamliner and A321neo aircraft on select domestic routes to accommodate more customers wherever possible,” he added.

While Vistara’s OTP improved to 80% the next day, challenges still persist since some of its pilots continue to have concerns regarding the contract, which the Vistara management is trying to resolve. The airline has decided to cut 10% of its flights beginning April 7 to prevent any significant decline in its OTP and last-minute cancellations.

Scaling down of operations by Vistara, according to experts, is expected to further push up airfares by 10-20% in a peak demand season like summer. Vistara controls 9.9% of domestic air traffic. Over the past few quarters, the local aviation market has been facing a supply crunch, as market leader IndiGo had to ground nearly 75 aircraft due to Pratt & Whitney engine issues and Go First going bankrupt. And, now with the pilot crunch in the Vistara cockpit, the summer could be harsh for passengers.

@arndutt