AirAsia India launches operations, fare war to intensify

Malaysia-based AirAsia currently operates international routes into Bangalore, Chennai, Kochi, Kolkata and Trichy.

PTI| Updated: Jun 12, 2014, 19:06 PM IST

Bangalore: Breaking into Indian domestic aviation space, AirAsia India on Thursday launched its operation with a flight from here to Goa in a foray that is expected to intensify the fare war among the no-frill airlines in the loss-hit sector.

AirAsia India, the Indian arm of Asia's biggest budget carrier Malaysia-based AirAsia Bhd, became the fourth low-cost carrier in the country after IndiGo, SpiceJet and GoAir, as its maiden afternoon flight took off from the Kempegowda International Airport on the outskirts of the city.

Ahead of the launch of operation, the airline already offered a promotional fare of Rs 990 for flights between the two cities, signalling that it would make the rivals fight more bitterly to protect their turf.

AirAsia is headed by Tony Fernandes, a millionaire former music executive.

"Our long-term goal is to offer air travel at affordable rates and provide an opportunity to every Indian to fly. Our competition is with the Indian Railways and not with other airlines in the country," AirAsia India Chief Executive Officer Mittu Chandilya told reporters here.

He added, "Our fares will be 35 percent lower than the market rates. At this rate, we believe we can sustain... We intend to bring down the tariff further as we are sure that we could make revenues with stable operations."

According to Directorate General of Civil Aviation data for April traffic, IndiGo dominates the local market with 31.6 percent share, followed by Jet Airways-JetLite combine with 21.8 percent and Air India with 18.3 percent. SpiceJet had a 17.9 percent market share and GoAir had 9.5 percent.

Malaysia-based AirAsia currently operates international routes into Bangalore, Chennai, Kochi, Kolkata and Trichy.

Weighed down by mounting operating costs, including for fuel, all barring one the country's half-dozen airlines are suffering losses in the domestic sector.

AirAsia, one of the most successful low-cost carriers in the world, got the aviation ministry's flying permit on May 8, the last of the many approvals needed for the airline to take off after a nine-month long wait marked by legal hurdles.

AirAsia India is a 49:30:21 joint venture among Malaysian carrier AirAsia, Tata Sons and Arun Bhatia's Telestra Tradeplace.

AirAsia had announced its joint venture with Tata Sons and Telestra Tradeplace in February 2013, four months after the then UPA government allowed up to 49 percent FDI in domestic airlines by foreign carriers.