AirAsia India Free Seats, Anyone?

Thursday, 28th March 2013 at 04:44am

Now that AirAsia has successfully made it through the first base following the approval of its joint venture with Tata group to form a new airline, its next move would have been to apply for a license to start its operations in the country. However, to the surprise of everyone in the industry, it has not sent its feelers yet as to when will it apply for a permit.

Now there are rumors that AirAsia India is going to offer seats to its customers at no cost. Of course, some people wouldn't take it at face value.

AirAsia India, though not named officially as such, is planning to commence its operations before the start of next year.

Tony Fernandes, who founded the budget airline, was quoted as saying that airfares would be the "no. 1 differentiator" in the Indian commercial aviation business where more than half of the market is dominated by low-cost airlines.

The airline was testing the waters of India in 2007 with the launching of direct service between the six southern cities of the country and Singapore. Possibly bullish about the growing air travel market of the country, it has partnered with Tata group to facilitate its entry.

Its entry into the local market has, no doubt, threatened the recovery effort of Jet Airways and SpiceJet, two of India's larger budget airlines, who have been struggling to cut losses. Kingfisher Airlines was the latest casualty in India's troubled aviation industry.

According to an executive of an airline consulting firm, AirAsia's Indian venture would most likely use planes already in its mother unit's fleet in Malaysia. It will possibly use the same business model it has been using in its home country which has been proven to be very successful - allowing passengers to pay only what they need. The airlines encourage their clients to purchase tickets online to get massive discounts, a cost-saving measure which minimize their expenses on travel agents.

The same executive disclosed that the commercial aviation industry in India has been piling up losses in the last five years, amounting to more than $6.6 billion. Fuel costs account more than half of an airline's operating expenses. The rising airport charges, likewise, add to the misery of the operators, making it hard for them to see profit.

Many industry experts wonder how AirAsia would fare in a country whose local aviation industry has been gasping for breathe. India's local airlines have a combined debt of $20 billion. In the last fiscal year, all, but one airline, posted losses. Only IndiGo, India's largest airline in terms of market share, posted a positive growth and the only airline made profits during the period.

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