Tuesday, May 4, 2010

Carriers Worry As AirAsia Ups Capacity To India

AWIN First May 03 , 2010
Neelam Mathews mathews.neelam@gmail.com
New Delhi

The Indian government has cleared the air operator’s certificate for AirAsia’s subsidiary Thai AirAsia. The carrier will start direct flights to Bangkok from Delhi and Kolkata in July once it receives remaining clearances, The DAILY has learned.

Malaysia-based AirAsia, Asia’s largest budget carrier, has become the only carrier to serve the Chennai-Penang route, with flights that started April 28. On May 6, its long-haul arm Air Asia X will begin offering Airbus A330 service four times a week to Mumbai. The carrier also plans to start flying to the Maldives soon.

The first five routes AirAsia started in India are not operated by any other airline. Air Asia will have 148 weekly flights to India by year-end. “We have just scratched the surface. I should be doing 600 flights to India. Look at Trichy [South India]...Now we are planning a thrice-daily. It just shows what a tremendous opportunity there is in India. By end of 2011, we will have added 30% more flights to India over 2010,” CEO Tony Fernandes tells The DAILY.

Air Asia will start Chennai-Kuala Lumpur service on May 18, daily A320 flights from Bengaluru (formerly Bangalore) to Kuala Lumpur two days later, and daily Hyderabad-Kuala Lumpur frequencies on July 18. Starting Aug. 1, it will offer daily service to Delhi with an A330 (DAILY, Jan 26).

AirAsia is now the only carrier to connect the lucrative Kuala Lumpur-Singapore-Bangkok triangle that is a must for Indian first-time travelers, a population segment that is growing steadily as the economy booms.

The invasion of the Indian market is expected to result in stiff competition. Air India Express, Jet Airways and Malaysian Airways already have considerably reduced their fares to Kuala Lumpur. Also, the rivalry may crimp the plans of India’s own budget carriers, Indigo and SpiceJet, soon eligible to fly international operations with plans for short-haul routes of under 5 hr.

Last year, Malaysia Airlines and Jet Airways signed a code share and a network-wide reciprocal frequent flyer partnership, but AirAsia is unfazed.

“This doesn’t change anything for us. Code shares, basically, are two airlines sharing existing capacity. If neither airline adds new capacity (e.g., on Delhi-Kula Lumpur), then it doesn’t change the supply equation,” says AirAsia X CEO Azran Osman-Rani. “Presently, besides MAS, there are no Indian carriers flying on the Delhi or the Mumbai route that Air Asia X will fly to. And data shows that demand exceeds available supply,” adds Azran.

The carrier is looking at flying to 15 Indian destinations by the end of 2011 once it secures approvals.

AirAsia’s plans count on Malaysian tourism rising to 650,000 visitors to India this year – up from 590,000 in 2009. About 2.1 million people of Indian origin live in Malaysia.

“India is a main growth market and its outbound travel is booming. With AirAsia scheduled to fly to major cities soon, we can achieve a 10% growth without any problems,” a tourism official was quoted as saying.

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