Low cost carrier AirAsia has chosen to launch its maiden flight under Indian operations on Bangalore-Goa route on June 12 with an introductory all-inclusive fare of Rs.990 per ticket. The AirAsia flight will start from Bangalore around 3 p.m. and leave Goa at 6 p.m. AirAsia will be operating A320 aircraft with sharklet wing-tips that promises better fuel savings when compared with other types.
Mittu Chandilya, CEO of AirAsia India, explained that Bangalore-Goa route was an attractive route to start with in view of the strong traffic driven by seasonal crowd. Bangalore-Goa route is presently served by almost all carriers.
Its second launch will be Chennai-Bangalore route, and that is expected to start on June 20. It would come out with a similar attractive fare offer for its second route Chennai-Bangalore.
AirAsia's entry has created a huge buzz in the market though, according to industry observers, there won't be any major impact on the industry in the near term as the operations of AirAsia will be limited to a few sectors. Also, discounts offered by AirAsia are likely to become more rational, and will be available over a limited inventory after the initial launch.
"The incumbent carriers are already looking to cut down operational costs, increase load factors and rationalize routes as most of them are making losses. Entry of AirAsia is unlikely to redefine their business models as there are limited levers to improve profitability. And fuel costs, which account for nearly 45-50 per cent of the cost structure, are going to be similar for all carriers," Rahul Prithiani, Director, CRISIL Research, told this correspondent.
Sharat Dhall, President, Yatra.com, felt that the new entrant would stimulate growth in the market. "In the past two years, airfares have actually gone up and a lot of people have moved to other travel modes. I am sure AirAsia's entry and its attractive offer will bring all those customers back to air travel , he said.
Meanwhile, AirAsia has also tweaked its model a bit to suit to Indian market. It has been selling major portion of its tickets only through its website.
Since travel agents and online travel portals account for significant share in bookings in India, AirAsia has chosen to work with select travel portals such as Yatra.com for deeper penetration.