AirAsia India wants foreign flying clarity before expansion

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Mumbai, May 17: Low-cost carrier Air Asia India has decided to go slow with its fleet expansion due to lack of clarity on international flying rules and has also deferred its one-plane-per-month fleet expansion plan, ending the year with 7-10 planes from the present five.

"We slowed down in adding one plane a month plan. I took the call of watching and waiting," airline's chief executive Mittu Chandilya told PTI, and blamed the decision to the lack of clarity on overseas flying rights for new airlines.

airasia

"Now we have five planes. ... By December, we should end up anywhere between seven and 10 planes," he said, adding the number of routes it operates will grow to 15 from the present nine.

Chandilya, the youngest chief executive in the domestic aviation industry, said the fleet expansion depends on the way forward on the 5/20 rule (five years of domestic operations and 20 planes) which governs flying abroad, evolving competition and solving the infrastructure issues plaguing the airports. "Ideally, they should abolish the 5/20 rule.

Realistically, it will be a variation where the point system (bonus scores for flying into the Northeast and other under-served markets that the government recently proposed) that they keep talking about will come out.

"I am very optimistic that things will change where open skies and free competition will all be something that will come up," he said, when asked about his expectations on the way forward with the 5/20 rule.

The new government has not been successful in pushing ahead with plan to relax 5/20 rule despite the fact that this was one of the initial reforms mooted by the Civil Aviation Minister Ashok Gajapati Raju.

The airline has clearly identified the overseas routes where it wants to fly, but the policies are a big deterrent, Chandilya added.

In January, the no-frills carrier had announced that it would add one plane per month from March onwards, which would have taken its fleet strength to around 14. However, its fleet has grown by only one plane to five now. 

Chandilya explained that the aggressive fleet expansion strategy involved taking on some routes which may be abandoned by competition due to their own internal troubles.

"We were looking at taking on some domestic routes that somebody else walked away from. Then I said, if we did that, it would be very short-term focus," he said, ahead of the first anniversary of the carrier.

He said airport infrastructure needs an upgrade for the carrier's footprint to grow, and pointed out the case of lucrative market of Mumbai where the facilities are a hurdle.

"If we start from Mumbai, we will be close to 100 per cent on load factors. Mumbai is a wonderful city, it has a travelling population who are looking to be adventurous, go to destinations that we could go to.

"It is the infrastructure (that is the problem), I can't afford delays. I can't be circling around in the air. I need very quick, 25-minute turnarounds," he said.

With the first anniversary of the airline, which is a joint venture between the Tony Fernandes-led Air Asia and the Tata Group and Rahul Bhatia-run Telestra Tradeplace, coming up on June 12, Chandilya said the airline continues to be excited.

"I am really excited about Indian aviation. There is a lot going on and I think the opportunities are there, they have never come down. I am very excited about what it holds for us," he said.

However, when asked that the market disruptive strategies generally associated with its parent are not seen here, Chandilya asked to wait and see the space, and also claimed that there have already been some of firsts the airline has achieved.

In an apparent reference to the war-of-words the company's top shots are engaged with competition on the micro-blogging site, Chandilya said, "people only pick up on Twitter thing, but we will be a lot disruptive in fares, prices, routes. We are only airline that has flown to two virgin routes, nobody else has done."

PTI

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