The domestic aviation space is all set to witness severe competition with the entry of AirAsia India, which starts operation from tomorrow.

AirAsia India, the Indian arm of the Malaysian no-frills airline headed by Tony Fernandes, will become the fourth budget carrier in the country -- after IndiGo, SpiceJet and GoAir -- once its maiden flight takes off from Bangalore to Goa at 1510 hours on Thursday.

Besides these, the Naresh-Goyal promoted full service airline Jet Airways also operates a low-cost service JetLite.

As of now among the domestic carriers, including full service ones, Rahul Bhatia-promoted IndiGo dominates the local market with 31.6 per cent share, followed by Jet Airways-JetLite combine with 21.8 per cent and Air India with 18.3 per cent, according to Directorate General of Civil Aviation data for April traffic.

While SpiceJet had a 17.9 per cent market share in April this year, GoAir had 9.5 per cent.
AirAsia India, whose top officials have promised to offer low and competitive airfares, will focus on connecting tier-II cities to begin with.

"Our airlines' fares will be about 35 per cent lower than the current market rates," AirAsia India Chief Executive Mittu Chandilya had earlier said.

The new entrant has already triggered the fare war by announcing fares as low as Rs 990 for its Bangalore-Goa and Bangalore-Chennai routes, forcing the rival carriers, including IndiGo to come out with matching fares.

IndiGo also announced promotional fares for just Re 1 on the Bangalore, Chennai and Goa routes, taking on the competition from AirAsia India's Rs 5 fare (excluding airport tax and other applicable fees) offer and putting on sale over 25,000 promotional seats with travel period validity up to October 25.

Leaping up the AirAsia India offer, the flyers rushed to book a seat at dream prices and the airline sold out the entire flight within 10 minutes of opening for sales.

Not only this, 25,000 seats were also booked within 48 hours of the announcement.