Vistara Losses Almost Double in FY19 Owing to High Fuel and Operational Costs

Vistara is the sixth largest carrier in the Indian aviation industry. The full-service carrier has been focusing on expanding its routes.

Highlights
  • Vistara's losses have soared as much as 93% compared to last FY
  • Vistara had also reported an infusion of Rs 2,000 crore from Tata Sons and Singapore Airlines

Last financial year wasn’t necessarily the best one for the Indian aviation industry. The sector saw some serious losses and hurt financials because of the fuel and operating costs. The situation was severe enough to push a major airline out of operations as well. The full-service carrier, which is the joint venture between Tata and Singapore Airlines, Vistara has also joined the the league in reporting slightly disappointing financials. Vistara issued its financial report for FY19, and these numbers aren’t as great as the airline would have expected.

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Vistara Losses Grow by 93% 

Vistara’s losses grew by a whopping 93% to Rs 831 crore in 2018-19, the Business Standard reported, citing Tata Sons’ latest annual report. On the other hand, another low-frills carrier, SpiceJet reported a net standalone loss of Rs 316.1 crore in FY19. In the previous year, the airline had made a profit of Rs 566.66. IndiGo also suffered the wrath of the industry as it witnessed a decline of 93% (y-o-y) in its standalone net profit which stood at Rs 156.10 crore.

Aviation turbine fuels costs were a major driving factor behind this. The fuel costs went up by as much as 23% in the year, whereas the Rupee depreciated by over 8% against the US dollar thus increasing operating costs for the airlines. Now, although Vistara expanded in capacity and revenue, the losses widened. In this time period, Vistara also expanded its fleet by two more aircrafts and carried over 5 million passengers in the last FY.

Vistara Putting Focus on Increasing Capacity 

Kapil Kaul, South Asia CEO of aviation consultancy CAPA, told, “Vistara’s FY19 losses are in line with our estimates. The first half of FY19 was financially challenging for the entire industry and its losses are aligned to the overall industry performance. Jet’s closure is positive for Vistara and it has improved its financial numbers, but reaching profitability will be a long haul.”

Vistara had also reported an infusion of Rs 2,000 crore from Tata Sons and Singapore Airlines which would be diverted to expand capacity and network. The airline has also started its services to Dubai and Singapore and plans to adds new routes in the coming months.

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Whenever Arpit boards a plane he is filled with awe and bewilderment and soaring above the skies is something marvellous for him. An aviation and tech geek through and through Arpit writes at AviationScoop not only because he's experienced and good at his craft but also because flying is something which makes his heart flutter with joy.

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