We expect over 15-20% lower entry-level airfares from AirAsia
With AirAsia India receiving AOP from aviation regulator, they are claiming that they will bring in revolution in the Indian domestic aviation market. However, only time will tell if it will be true. What they are doing in other markets like Malaysia and Thailand, they are claiming do the same in India. We have kept our fingers crossed, because if it happens it is good for India and its domestic travellers. For example, at present, Pune-Delhi airfare can go as low as Rs 3,800 and the same is hiked to even Rs 10,000 during the peak season and depending on the demand. If AirAsia is entering with even more lower price, definitely there will be a price war among other airlines and a fierce competition too. We are expecting over 15-20% lower entry-level airfares from AirAsia. If it is so, it will definitely make a big difference to travellers and especially make it affordable for everyone to travel by air. However, for us agents, it will make no difference. Only if the number of air travellers increases drastically within India, we can expect extra business. With AirAsia there are two more airlines which are expected to enter the Indian aviation market soon.
—Krishna Gopalan, Chairman, Pune Chapter, Travel Agents Association of India
In absence of infrastructure there is bound to be cost escalation
Even though AirAsia is claiming to bring in a revolution in the domestic airfare within India, I do not expect there will be much of a difference in the fare they will be offering. Air travel in India is not getting costlier because air travellers have increased, but because airlines are incurring huge operating cost, hike in jet fuel price and of course heavy taxation levied by the government. With all these heavy costs that the airlines incur, how do you expect them to offer low airfare, which is affordable by common man. It is an entry-level price offer from AirAsia, which will not be sustainable for a longer period. If you look at the present airfare of any airline, the base price is very low, but what amounts to the large portion of the airfare is the taxation and other service charges. If we are bringing in commercialisation in the aviation market, we also need the supporting infrastructure. In absence of infrastructure there is bound to be cost escalation, which will be connected to airfare.
—Anil Bokil, economics analyst
We have an example of what happened to Kingfisher Airlines
When you are entering a market, they have something called a competitive entry price, wherein you get people to know you and probably attract them towards your offer. If you are offering say 30% lower price, the question is will it be a sustainable price. At the end, the supply-demand and cost factor will have to bring in the equilibrium. We have to note that fuel cost and taxation is same to everybody, it is not that you are offering a different concoction. We have an example of what has happened to Kingfisher Airlines. Today, all the other airlines in the domestic aviation market are making losses. In a competitive market if you are going all the way out and are able to maintain the same over a period of time, then AirAsia will make a difference.
—Pradeep Bhargava, immediate past chairman, CII-western region
Other airlines will have to increase their efficiency levels
In my belief, AirAsia will not be operating from bigger cities like Delhi and Mumbai but would be operating from smaller cities. They are looking at 60% focus on Tier II routes. With AirAsia’s entry, it would definitely trigger a price war. However, it would also lead to airlines being more efficient. Other airlines will have to buck up and increase their efficiency levels. The low-cost carriers like Spice Jet, Indigo, Go Air etc. will be definitely impacted. AirAsia proposes to offer 35% prices lower than the market fare. It will be good for the ordinary citizens for whom air travel will finally become more affordable. This news has met with a lot of cheer among ordinary citizens; while there is a reason of some concern among the already operating airlines.
—SK Jain, president, MCCIA
AirAsia India is a Malaysian-Indian low-cost carrier
It is a joint venture, partnering AirAsia, Tata Group and Telstra Tradeplace
On May 7, DGCA granted Air Operator's Permit(AOP) to the airline.
The joint venture marks Tata's return to Indian aviation space after 60 years
AirAsia won't operate from Mumbai and Delhi. Chennai may be its main hub
Initially, the domestic carrier will use at least 4 to 5 A320 aircraft