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How is Air Asia planning to stay profitable in India

Thursday, 3 July 2014 - 12:02pm IST | Place: Mumbai
Air Asia would focus on the North East. The Air Asia CEO and founder Tony Fernandes said that the company would not introduce flights as much in the frequently travelled routes and would rather stick to the routes that do not see many fliers. Therefore, it will focus on North East as the next big flying destination.
  • Air Asia said that it would offer promotional fare of Rs 500 for its flights between Bangalore and Kochi

Air Asia is here to fight with other domestic players in the country, but also to make the others fight among themselves. Air Asia, by raging a price war is expected to bring down airline prices in India. By insisting on the importance of flying and by making it affordable to more Indians, Air Asia is actually serving the people of the country said Ratan Tata today. As its business policy, Air Asia would focus on the North East. The Air Asia CEO and founder Tony Fernandes said that the company would not introduce flights as much in the frequently travelled routes and would rather stick to the routes that do not see many fliers. Therefore, it will focus on North East as the next big flying destination.

Air Asia had recently announced it will begin its service from Kerela's Kochi to Bangalore in Karnataka after its raging success with flights travelling from Bangalore to Chennai and Goa. Tickets on Air Asia's maiden flight had been sold out in first 10 minutes while it had sold 25,000 tickets in less than two days. Air Asia said that it would offer promotional fare of Rs 500 for its flights between Bangalore and Kochi. 

Air Asia has to fight a rising competition where other domestic fliers like Indigo and Spicejet have announced hefty monsoon offers though on routes that are not frequently flied, the ticket prices refuse to fall. Not only during monsoons, the airlines offered even heavy discounts on routes like Delhi-Goa during the September-December period, to make people buy their tickets well in advance. The presence of Air Asia in the country would just fuel fire to this war.

As a result, Air Asia announced that it could break even in eight months instead of the four months projected earlier by the company leadership. However as Economic Times reported the company might take its expansion procedure slowly as well. The company is applying for license to fly abroad from India which is according to existing rules not allowed unless an airline has flown for 5 years domestically and has 20 planes in their fleet. All airline companies want the rule to change and Air Asia will only extend its fleet if it is allowed to fly international as well. 

The good news is the airline ticket prices might be in for further reduction once the Tata-Singapore Airlines gets its permit to start operation which is also expected to happen by the end of the year.


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