Smaller cities key to AirAsia's aggressive flight plan for India
in the Asean region. The airline’s cost for providing each seat or cost per available seat per kilometer or CASK was the lowest globally at $4.1 in 2011. Indian competitor SpiceJet’s CASK was $4.7 while Jet Airways’ CASK was even higher at $7.9.
The low-cost strategy is set to continue in India as well. “Price will be our number one differentiator,” said Fernandes. “We will avoid certain airports which are most costly. We have developed a low-cost structure and this will help us offer low fares.”
“The fact that the government is upgrading smaller airports to handle Airbus A320s will also help us,” he added.
AirAsia’s entry with the focus on smaller cities comes at a time when the government is focussed on increasing connectivity for them. The Airports Authority of India is due to complete the modernisation programme of 25 airports in smaller cities by the end of this year.
Fernandes is so bullish about the tier-II/III market that he is even prepared to give Mumbai and Delhi a miss to adhere to his low-cost structure. “Mumbai and Delhi are clearly high-cost airports that won’t be our major focus,” he said. “Delhi has a low-cost terminal, but slot congestion is a problem there. Our business plan is not predicated in these two airports.”
Meanwhile, AirAsia will be investing Rs 80 crore to start off with, according its FIPB proposal. Tata Sons will invest Rs 48.58 crore while Telestra will invest Rs 34 crore. The airline will also be using its own brand name ‘AirAsia’.
“Further
Be the first to comment.
