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Will this new airline transform travel in India?

Vistara Press Release

India's newest airline Vistara – a joint venture between Singapore Airlines and Indian conglomerate Tata Sons – will take to the skies on Friday with ambitions to transform passengers' air travel experience in the country.

Vistara – derived from a Sankrit word that means limitless expanse – will become India's third full-service airline joining flag carrier Air India and Jet Airways. It will offer a "premium economy" class that differentiates it from direct competitors.

The newcomer will begin operations with two Airbus A320 aircraft, initially offering flights to Mumbai and Ahmadabad from its Delhi hub. It plans to increase its fleet size to five by March and 20 by 2017.

Vistara promises a more efficient check-in and boarding process than its peers, an "intuitively thoughtful" on-board experience, comfortable and spacious seating, and carefully selected meals. In India's fiercely competitive aviation sector, delivery on these promises will be paramount, say analysts.

Well-timed takeoff

Vistara's launch comes against a favorable backdrop of an economic turnaround, improving consumer and business sentiment, and lower oil prices, all tailwinds for the new entrant.

"It's still early days, but the timing is very fortunate," Arvind Singhal, chairman of advisory firm Technopak told CNBC.

"India's economy is finally starting to show signs of growth. One of the first beneficiaries will be the airline sector, given more business travel," he said, which he says should help create demand for the airline's premium economy offering.

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Backed by two well-reputed companies - Singapore Airlines and Tata - Vistara is also entering the market with strong branding.

"Indian consumers have high respect for both these brands. Many Indians feel that had Tata-SIA managed to enter India in the late 90s, Indian aviation would have been very different today", said Amber Dubey, Partner and India Head of Aerospace and Defense at global consultancy KPMG.

Vistara

Kiran Mahtani, a Mumbai-based travel agent said many of his clients are anxiously waiting to try out the airline.

"We have gotten enquires from our regular travelers, but right now [Vistara] are only flying twice a day and they need a bit more flexibility," he told CNBC. When the frequency of flight increases and more routes open, Mahtani expects the airline will garner a lot of interest among travelers.

Sky's the limit

The airline's potential is boundless given the possible synergies between Singapore Airlines and Tata, said Dubey, calling their partnership the "marriage of the decade" in India's corporate sector.

"Tata is one of India's oldest, largest and respected conglomerate with operations in hotels, transportation, automobiles, aviation catering, telecom, retail, IT and general aviation," said Dubey. "All these are key back-end requirements of an airline. There's potential for huge synergies here."

However, it won't all be blue skies.

India's aviation sector, whilst promising due to the country's bourgeoning middle class and low air travel penetration rates, presents a tougher operating environment than most other markets.

Facing intense price competition and exorbitant operating costs owing to high airport and fuel taxes, carriers have been locked in a battle for survival.

"It's an exciting venture [but comes] at a time when Indian aviation is going through a rough period," said Dubey, noting that Vistara will not be immune to challenges facing other players in the sector.