New Delhi: Low-cost carriers (LCCs) in India say they do not expect AirAsia to commit hara-kiri in the domestic skies, what with net average fares already in the low range of Rs 4,000-4500 per passenger. They point out that AirAsia would have learnt - from its not-too-successful debut in India through their international operations - that low-cost fares, which it offers in Malaysia, are unsustainable in India.
LCCs will, however, brace for average net fares to go down by 8-10 per cent because AirAsia is expected to begin operations with rock-bottom promotional fares for a few seats. "Such fares can only be promotional in nature in India and can't be sustained for long. Even we will bring down prices. But we are not worried," says a top executive of a leading LCC in the country.
But AirAsia's signature is its mega low-cost fare. For instance, it is offering two million seats for travel to Southeast Asia at fares which are available for as low as 30 per cent of its regular fare. Yet, for domestic passengers in India, there is no novelty in such a scheme anymore. After all, domestic LCCs have used a similar marketing tack to get passengers to fly in the lean seasons. SpiceJet kicked off a price war, a few months ago, by slashing fares for one-way travel across the country, down to a consolidated Rs 2,013, inclusive of all taxes. The offer of one million such one-way tickets for a limited period soon had other LCCs following suit.
AirAsia's challenge in establishing the brand in India is a classic one. Unlike Malaysia where it did not have competition from other LCCs, its new market has quite a few thriving players. It is entering when this indigenous competition already controls over 60 per cent of the market. So, for the late entrant, Fernandes' ambition to press 36 aircraft into operation by 2017-18, will still lend it a size that will only be a third of that of the biggest player, IndiGo. It will fly over 120 aircraft to as many as 40 cities by then.
15/05/13 Surajeet Das Gupta/Business Standard
