 "Air Asia to skip high-cost airports")
Air Asia will be investing $30-60 million in its Indian airline and will announce its chief executive officer in next 2-3 weeks.
Last year Air Asia had pulled out of Mumbai and Delhi routes citing steep aeronautical tariffs and taxes and its Indian operations will have clear focus on tier II and III cities using airbus planes. Fernandes also ruled out using turbo prop planes like Bombardier Q-400s or ATR-72s flown by other airlines in India.
On Wednesday the Malaysia-based airline announced it had submitted an application to Foreign Investment Promotion Board to invest 49% into a proposed Indian joint venture together with Tata Sons Limited and Arun Bhatia of Telestra Tradeplace Pvt. Ltd..
"Our initial capital will be $30-60 million. We have a strong distribution system, network and we have low cost structure,'' Fernandes said. He said he airline will start its operations from Chennai and hopes to start operations by last quarter of the year. The airline will have a work force of 300 planes.
"There will be certain airports we will avoid because of high charges. We will not go there,'' Fernandes said adding that he will convince the airport operators in India to create facilities like low cost terminals. Another reason for avoiding airports like Mumbai is non availability of adequate slots. "There are constraints which does not bode well for us," he added.
Fernandes said he will stick to airbus operations to keep the business model simple and costs low. "At no point we will consider 70-seat planes,'' he said. On the question of high taxes in India said "I started when fuel prices was $30 a barrel now it is $130. Yet our margins have improved and we are probably the most profitable airline. We are coming to the Indian market with our eyes wide open (with regard to taxation) and will convince the state governments that there is more gain in high volumes and low taxation.
Fernandes said opportunities in India were immense. "If you add up all the planes in India it is still less than those in Malaysia. There is enough market for us," he said. Government norms do not allow start up airlines to launch international operations but Fernandes is hoping to connect Gulf states with India creating a pan-Asia network for the airline.
Centre for Asia Pacific Aviation's Kapil Kaul fears that the new airline could face regulatory challenges as there is no clarity with regard to issue of fresh airline operating permits. Fernandes however expressed confidence that the airline will clear steer of regulatory hurdles.