How AirAsia wants to win in India: Lowest possible fares, quick expansion

AirAsia got positive feedback from low-cost airports in India and will ultimately operate Delhi and Mumbai sectors too, but there is no rush right now

Sunainaa Chadha July 01, 2013 13:01:02 IST

AirAsia, which plans to launch a budget airline in India later this year, will aggressively expand its fleet and is looking to add at least 10 planes a year, Chief Executive Tony Fernandes told reporters in Mumbai on Monday.

Fernandes said AirAsia would want to offer the lowest possible fares in its Indian operations.

How AirAsia wants to win in India Lowest possible fares quick expansion

Tony Fernandes

"Airasia India success depends on low fares and low-cost structure. We have done it for 11 years. India is no different," Fernandes said, adding "Indian airlines definitely don't want us to succeed but we will fight back and break conventional wisdom".

AirAsia, the largest budget carrier in Asia, plans to launch a regional airline in India with an initial investment of Rs 80 crore to cash in on rising demand for domestic air travel among the country's rapidly expanding middle class.

"Air Asia India already has its planes in place. We have ten pilots and 16 cabin crew for India ops already. We havealready hired 50 people in India and plan on doubling this headcount by the end of the year", said Fernandes adding that the airline requires 56 to 57 percent occupancy to break even in India.

Tata Group and investment firm Telestra Tradeplace are its partners in the venture.

He also said that AirAsia has got positive feedback from low-cost airports in India. The company will ultimately operate Delhi and Mumbai sectors too, but there is no rush right now due to the high cost of airports and heavy taxation on aviation fuel, he said.

He also clarified the company was not targeting IndiGo pilots. A PTI report had earlier said quoting sources thatIndiGo may lose a good chunk of its commanders to AirAsia India as around 100 of its pilots have applied for jobs with the proposed carrier.

Fernandes stressed on the right culture and right people for AsiaAsia to succeed in India. Reminiscing about Air Asia Malyasia's early days, Fernandes said the only of growing and becoming a market leader is by nurturing your people. From drivers to baggage attendants, AirAsia's crew has been given the opportunity to charter planes to their hometowns, which ultimately led to a 19 percent growth in margins for the airline.

"That's how you build an airline. Give everyone an opportunity and treat everyone equally. This is what sets us apart from other airlines," he added.

About 11 years ago, AirAsia catered to two lakh passengers and this year we it carry about 44 million passengers. That kind of growth has not happened in India, Fernandes noted. "We will be explaining to the government how we have developed a complete aviation market. The biggest beneficiaries of low cost carriers would be small and medium businesses, tourism segment and migratory workforce. So, we are trying to explain our successful model and how government can facilitate it," he said today, while talking about his growth strategy in India.

The airline will start with three Airbus aircraft with sharklets and add one aircraft every month. Fernandes hopes to have a fleet of 12 aircraft by next year.

"Every operator is focused on Delhi and Mumbai. We will start looking at lot of new destinations and at the markets that have been under served. For example, Tiruchi in the south. No operator had connectivity to Tiruchi from Kulala Lumpur and it has an average load factor of over 80 percent. We like to do things no one has done before," he said.

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