The news broke in the midst of the latest price war in India's aviation sector. Malaysia-based AirAsia and the Tata Group are joining hands to launch a budget airline in India. Delhi-based businessman Arun Bhatia is also part of the venture. The smiles on the faces of India's middle-class, already enjoying the low fares raining down on them, just got wider. They're cheering as much as they did when Captain Gopinath's low-cost airline, Air Deccan, allowed them to fly paying train fares.
However, the entry of another airline at a time when all the big Indian carriers are struggling financially - though they have had a couple of good quarters after Kingfisher Airlines was grounded - is not good news. If AirAsia gets all the requisite permissions and launches operations, its entry will put a greater strain on their financials.
Budget airlines have cornered 54 per cent of the Indian market, which is growing fast because of a huge middle class and very low penetration. The advent of AirAsia in the budget/low-cost carrier (LCC) segment will check any rise in fares over the next few years.
21/02/13 Anand Adhikari/Business Today
