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AirAsia India on Friday triggered a price war in the domestic aviation market, pricing tickets on its maiden flight from Bangalore to Goa on June 12 at a one-way all-inclusive fare of Rs 490. On the return leg, the all-inclusive fare costs Rs 291.
This is a part of a promotional offer to announce the launch of its operations from June 12. AirAsia on Friday announced that its was offering 15,000 seats at a basic fare of Rs 5 for travel on Bangalore-Goa and Bangalore-Chennai routes between June 12 and October 25. Tickets are available for sale till Saturday night.
There will be a charge of Rs 199 on luggage of up to 15 kg on AirAsia’s domestic flights.
When Business Standard tried checking on the Bangalore-Goa route of June 12 it showed seats not available. Tickets for June 13 on the route were available for Rs 1,699, which included a basic fare of Rs 1,157.
Tickets on the Bangalore-Chennai route are priced at Rs 490 each, inclusive of taxes, and the Chennai-Bangalore ticket is available at Rs 339.
Earlier in the day, the airline had announced a fare of Rs 990 (later cut further as stated above) on its inaugural Bangalore-Goa route on June 12.
Altering its originally stated plan, it also said it “may” shift its headquarters from Chennai to Bangalore or Goa, where the company believes the relationship with the state government is better.
The Directorate General of Civil Aviation’s approved schedule says the airline will park its aircraft at Bangalore, though AirAsia had earlier stated Chennai would be the home and base. Kapil Kaul, chief executive officer, Centre for Asia Pacific Aviation, said: “It (Bangalore) is a large and cosmopolitan city, with a strong corporate traffic base, and a young tech-savvy demographic that is well aligned with AirAsia’s positioning. The private operator at Bangalore (airport) is more likely to be willing to work with AirAsia and accommodate its requirements than the AAI (Airports Authority of India) at Chennai.”
He also noted the likelihood that the state government in Karnataka would reduce taxes on aviation turbine fuel (ATF) from 28 per cent to 16 per cent or maybe even 12 per cent, as compared to 29 per cent in Tamil Nadu, as another factor determining the possible shift.
AirAsia India is a joint venture between Malaysian carrier AirAsia, Tata Sons, and Arun Bhatia’s Telestra Tradeplace. The airline got the DGCA’s nod earlier this month.
Rival airlines have already cut fares in the Bangalore-Goa sector to take on AirAsia India. On Thursday, budget carrier SpiceJet announced special promotional fares on the Chennai-Bangalore and Bangalore-Goa routes by offering tickets as low as Rs 1,499, excluding statutory taxes. This limited inventory offer is for travel dates from June 12 onwards, the airline had said. Currently, one-way tickets on SpiceJet and GoAir are available at an all-inclusive fare of Rs 2,058 on the Bangalore-Goa route.
IndiGo has offered a base fare of Rs 1 on the Bangalore-Goa route on June 12.
Mittu Chandilya, chief executive, AirAsia India, said the cut-price fare would go on “for some time” but wouldn’t specify. The airline will offer “hot seats” with extra leg room on its flights but has desisted from opting for a two-class configuration, with business class seats for corporate passengers.
Sharat Dhall, president, Yatra.com, said, “We are eager about launching the sales of AirAsia India flights on our portal from tonight and expect this to spark a buzz in the domestic air market. The airline has already created excitement amongst travellers by announcing attractive launch fares for a route like Bangalore-Goa. We expect AirAsia’s entry to catalyse growth in the domestic air market, sluggish for the past couple of years, and are enthusiastically looking forward to the ripple effect their entry will create in the next few months.”
Kaul cautioned, “Based on established behaviour of incumbent carriers, the competition will greet AirAsia with tactical fares intended to erode any price advantage they may seek to offer…In the ensuing low fare and high cost environment, it would be remarkable if the start-up was able to meet its target of achieving break-even within four months of launch.”
Chandilya told reporters the the first A320 flight would leave Bangalore on June 12 at 3 pm, followed by Bangalore-Chennai on June 20. The airline will park its first aircraft in Bangalore after it commences flying. He listed seasonality, traffic and flight duration as some of the major reasons for choosing to start operations with flights in the Bangalore-Goa sector.
Chandilya said AirAsia India was not wary of competition, “The ultimate winner is going to be customers. Competition is good but we are not dependent on others. I want to compete with ourselves.”
Operationally, Chandilya said the airline was looking at a turnaround time of 25-35 minutes. Controlling cost without compromising on quality would be the way to make the business work, he added.
Responding to a question, on whether AirAsia India will look at flying abroad, he said, “If the rules permit we will, but our plans, especially for the first 10 aircraft, are not based on overseas. We are excited about India.”
The airline, however, ruled out operating to Mumbai and Delhi. “Mumbai and Delhi doesn’t make sense now,” said Chandilya, adding the airline plans to connect 10 cities with a fleet of 10 aircraft by the end of this financial year. The second aircraft is expected to come to India in another two months.
