Chennai/Mumbai: Malaysian low-cost airline AirAsia on Saturday said it expects to begin operating in India by the end of 2013, against its original plan of starting in September.
“We are yet to get all the approvals and hope to start operations by the end of this year. It is important we start right,” said AirAsia group chief executive Tony Fernandes, adding that the airline was awaiting a no objection certificate from the ministry of civil aviation and currently the application is with the home ministry.
Fernandes was addressing the media in Chennai.
AirAsia will start operations with three Airbus aircraft and add one aircraft each month to its fleet in the first year of its operations, Fernandes said.
Initially, the airline plans to focus on south India and not ply on the Delhi-Mumbai route, which accounts for nearly 50% of the country’s air traffic. It will expand its services to other parts of the country in the second stage, Fernandes said.
To stimulate traffic, AirAsia may resort to competitive pricing, similar to the fares offered by the erstwhile Air Deccan which priced tickets from Rs.1.
AirAsia may enter by offering even “free” tickets, Fernandes said, adding, ”We will offer fares at low cost...although in Malaysia most of our tickets are sold on the Internet, in India we will tap mobile so that everyone is able to access our service.”
“They know their game very well. They know how to offer low fares and keep their costs low. It will be great for passengers who are struggling with higher fares,” said M.G. Mohan Kumar, former chief financial officer at Deccan Aviation, that ran Air Deccan.
“Aviation fuel is not an issue. When we began operations 11 years ago, jet fuel was $30 and now it is $120, and still our fare is the lowest,” he said.
“We have a culture to have a flat organization. There are no cabins in our Malaysian office, which enables all employees to talk with each other; and this set-up helps cut costs,” Fernandes said.
The budget airline aims to focus on tapping alternative revenue models, including charging passengers carrying extra baggage, ordering food and seeking other services.
AirAsia will also look at setting up ancillary services such as air travel insurance and duty-free shops in the country, Fernandes said.
“Aviation has not changed in India. Aviation has not grown in the same way as the Indian economy. AirAsia will change it,” Fernandes said, adding “India is not different from other south east Asian markets.”
AirAsia has already put in place a strong leadership team for its India operations, which is a joint venture with Tatas and Telestra Tradeplace.
Former Tata Consultancy Services Ltd (TCS) chief S. Ramadorai has been appointed chairman, while top industry leader Ratan Tata has been named chief adviser to the board of AirAsia India.
Besides, R. Venkataraman (former executive assistant to Ratan Tata) and Bharat Vasani (chief legal counsel of the Tata Group), are among the directors on the board. AirAsia India is a joint venture of Air Asia, Tata Sons and Arun Bhatia of Telestra Tradeplace with 49:30:21 holding.
AirAsia will be represented by Fernandes and Kamarudin Bin Meranu. Last month, Fernandes had named Mittu Chandilya as CEO of AirAsia India.
The top team of the airline comes without no background in aviation, but Fernandes said: “Aviation was not handled well here, so why will I hire a person with airline experience who comes with pre-conceived notions.”
“I did not have an aviation background, but you learn,” said Fernandes, who used to sell music records.