AirAsia to carve new market in India; add 10 planes annually

AirAsia India, which is planning to start operations in the country with three planes later this year, today said it will add at least 10 planes annually and was looking at carving out "a new market" here.

"The airline is here not to take anybody else's business market share away, but to create a new market in this 1.2-billion market," AirAsia Group Chief Executive Tony Fernandes said.

He was addressing the media during his maiden visit after the airlines announced its joint venture with the Tatas and Delhi businessman Arun Bhatia in February.

Stating that he has not faced any bureaucratic hurdles so far, Fernandes, flanked by his deputy Kamarudin Merananun and India chief Mittu Chandilya, also said he is travelling to the national capital this evening and will be meeting Aviation Minister Ajit Singh tomorrow.

He said this in reply to a query that the Minister, after the announcement of the 49:30:21 joint venture, had said he would have been happy had Tatas themselves launched the airline instead of it being done through a foreign joint venture.

When asked how he will achieve scale and success with just three planes and that too connecting only southern region, Fernandes said: "We will aggressively expand the fleet size and are looking to add at least 10 planes a year."

On pricing strategy, Fernandes said AirAsia will want to offer the lowest possible fares in this market.

The AirAsia Group CEO added that with a huge online population in the country, he is hopeful of achieving scale through lower priced tickets and cutting costs by offering most of the tickets online, keeping the agents away as much as possible.

It may be noted that almost 90 per cent tickets are still sold through agents in the country, while the Kuala Lumpur- based AirAsia sells over 80 per cent online, through its own website.

Fernandes said when he launched the airline nearly 12 years ago there was nothing called e-commerce in Malaysia, but he is entering India at a time when the e-commerce is booming.

Chandilya said his challenges are more internal than external in the sense that cost management is the biggest challenge given his "mandate to turn profitable from day one".

To a question on whether AirAsia is willing to offer higher packages to IndiGo pilots based on the reports that many of them have applied in the new airline, Fernandes said there is no substance to the report.

He the airline cannot pay more than market price and as such was the best paymaster among the low-cost Asian carriers.

The company has already the first batch of pilots and cabin crew in place. Fernandes said it needs only 10 pilots and 16 cabin crew per plane, much less than the industry average.

On asked why the airline was not preferring to go to Delhi and Mumbai, the country's largest markets now, Fernandes said, "There is no rush for us to go to Delhi and Mumbai airports, as they are charging crazy. But eventually we may have to go in there, say when these cities have a second airport or low cost terminals."