Finally, AirAsia is all set to take wings. More than a year after the Malaysian low-cost carrier in joint venture with Tata Group and Telstra Tradeplace, set up shop in India, it received the Air Operator’s Permit (AOP) from aviation regulator on Wednesday.
“History has been made today in aviation. Everything has been hard for AirAsia but we never give up. Today, AirAsia India has just got approval”, tweeted Tony Fernandes, Group CEO, Air Asia, on Wednesday evening.
Soon after the permit was received, Mittu Chandilya, CEO, AirAsia India, tweeted: "Boom! 1815hrs (IST) today AirAsia India was born. So proud of my team. Who is ready to revolutionise air travel in India."
“AirAsia will be the lowest cost at great quality, reliability and safety. We are better prepared to operate a low-cost airline today. Aviation is not a product meant as luxury product according to me and that everybody should be able to fly." Chandilya said.
The approval will be subject to the judgment of the high court with regards to the ongoing litigation against it.
Though it is still not clear when the airline will start flying, it now needs its flight schedule programme to get cleared by aviation regulator Directorate General of Civil Aviation (DGCA) before it could start flying.
The airline will not operate from Mumbai and Delhi because of high landing and parking charges. About 4-5 A320 aircraft will be used initially for the operation, which will then be escalated to 10 aircraft in a year, the airline officials said.
“The development augurs well for passengers as they might get more choice.” Peeyush Naidu, senior director, Deloitte, said.
The approval comes after a long delay in getting the clearance for the operation, amidst stiff resistance from competitors and a legal battle with BJP leader Subramanian Swamy who alleged that the airline start-up is infringement of the FDI policy which was cleared last year. The case is expected to be heard by the court in July. Apart from Swamy, Federation of Indian Airlines too is opposing the entry of Air Asia as well as Tata-SIA, another airline seeking entry into Indian aviation market.
Kapil Kaul, CEO of leading aviation consultancy firm CAPA, said: “It has been a long ordeal for them as the wait to get regulatory clearance has taken 15 months. Expect a very aggressive pricing structure; especially the advance purchase market will get stimulated.”
In antitipation of Air Aisa's arrival domestic airline had started a scorching wage war in the last few months.
According to an aviation analyst, SpiceJet will be the most impacted because they are well connected in South India with a 30% capacity in Chennai which AirAsia India is also going to make its hub.
Rashesh Shah, aviation analyst, ICICI Direct, said: "There will be a high impact on competition as they may come up with lucrative offers. However, they may not be able to reduce fares substantially since DGCA is keeping a watch. It is yet to see how they are going to create routes on their network though they will mostly operate from southern India."