AirAsia India Optimistic Of First 12 Months

Monday, 7th July 2014 at 02:13am

Indian carriers must have been befuddled by AirAsia India's bold declaration that it can weather the first 12 months of its maiden operations and still be able to break even.

How could it possibly be? They might ask. But they must not look far to search for proof.

For the budget carrier like AirAsia, nothing is impossible. It has long been proven years before, when the heavily-indebted state-owned airline succumbed to total bankruptcy before Tony Fernandes bought it for a token of US$1 from the Malaysian government. His astute business skill turned the loss-making and debt-laden carrier into one of the world's most profitable and biggest aviation empires. And the rest, as they say, is history.

Indian carriers, on the other hand, can't seem to find their groove when it comes to profitable operations. Except for IndiGo, all other local airlines have been piling up losses and amassing debts due to many factors such as skyrocketing jet fuel prices, exorbitant airport fees, labor costs, high operating costs, low demand, etc.

Here comes AirAsia India. Launched only last June 12 after more than a year of waiting, the self-styled business mogul and CEO of AirAsia group, Tony Fernandes, is nonetheless quite optimistic on his new venture's first year of operations in India.

When asked how could he declare such bold projection for a new carrier in a country where most of its airlines are either in the brink of bankruptcy or in desperation, Fernandes merely said that his company has already gained more experience in the industry than ever. He said they have learned a lot of lessons from their previous ventures. His past ventures in Thailand, Indonesia, and Malaysia took two years, on average, to break even.

Tony Fernandes disclosed that his company invested more than US$40 million in his joint venture with Tata Sons. His company holds a controlling stake in the venture through his 49% share. The remainder, or 51%, is shared between Tata Sons and Teslestra Tradeplace, making them minor stakeholders.

The new budget carrier operates its main hub in Bangalore with two initial routes to Goa and Chennai. Currently, it keeps a fleet of two narrow-body A320 aircraft for these routes, but it will eventually acquire 4 more aircraft of the same type before the end of this year.

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