Mumbai: Air Asia's USP is in its low fares all year round. The airline can afford the low costs because its per unit costs are amongst the lowest amongst all airlines and earns about 18% of all revenue from ancillary sources. However, experts say replicating the business model in India will be a challenge because of high cost structure and taxes.
Air Asia's unit costs are significantly lower than Indian carriers due to use of low cost terminals, lower distribution costs, single aircraft type operation and higher aircraft utilisation amongst others. Unit costs or cost per available seat kilometre (CASK) refers to expenses incurred on flying a seat (filled or empty) over a kilometre.
A J P Morgan report shows Air Asia's CASK is (4.4 cents) is lower than SpiceJet (6.4 cents), JetLite (7.5 cents) and Jet Airways (9 cents). Air Asia claims that its CASK (along with Ryan Air) is the lowest amongst all airlines. One of the reasons for low operating costs is that aviation fuel is not taxed in Malaysia.
25/02/13 Aneesh Phadnis/Business Standard
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Air Asia's unit costs are significantly lower than Indian carriers due to use of low cost terminals, lower distribution costs, single aircraft type operation and higher aircraft utilisation amongst others. Unit costs or cost per available seat kilometre (CASK) refers to expenses incurred on flying a seat (filled or empty) over a kilometre.
A J P Morgan report shows Air Asia's CASK is (4.4 cents) is lower than SpiceJet (6.4 cents), JetLite (7.5 cents) and Jet Airways (9 cents). Air Asia claims that its CASK (along with Ryan Air) is the lowest amongst all airlines. One of the reasons for low operating costs is that aviation fuel is not taxed in Malaysia.
25/02/13 Aneesh Phadnis/Business Standard
