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AirAsia ready to fly

Aparna Dutt Sharma, Chief Executive Officer, IBEF

Jun 02, 2014 14:36

AirAsia India, a joint venture between Malaysian airline AirAsia (49 per cent), Mumbai-based Tata Sons (30 per cent) and Delhi-based Telstra (21 per cent), has announced its much anticipated launch in India. The Malaysian low cost airline will undertake its maiden flight on June 12 and will commence operations in two sectors – Bangalore-Goa and Bangalore-Chennai. True to its reputation, the airline has made headlines with its INR 5 promotional fares for 15,000 tickets. With the inclusion of airport taxes and other fees, the price of these tickets range somewhere between INR 291 and INR 490 for the two sectors.

Going forward, the company has assured that it will be offering fares that are 30-35 per cent lower than the norm. In a span of around 13 years since current AirAsia CEO Tony Fernandes took over, the airline has built its low cost model through a combination of practices, including efficient aircraft utilisation, lower costs and higher productivity of the airline and staff. In a media interaction, AirAsia India CEO Mittu Chandilya has expressed optimism on achieving 10 per cent market share in a year’s time and also breaking even in a few months.

India’s aviation sector promises tremendous opportunity for domestic and international players. Recent studies indicates that India has the potential to be the third largest aviation market by 2020 and even emerge as the largest by 2030. Indian carriers are in fact looking to double their total fleet size to 8000 aircraft by 2020.

Incumbent players have achieved considerable success in the no frills space, given that the low cost carrier (LCC) model currently accounts for an overwhelming 70 per cent of the domestic capacity. The low cost no frills positioning introduced by AirAsia should encourage more competition and a better value for customers.