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AirAsia India is the AirAsia Group's brand for its subcontinent operations. The low-cost carrier commenced domestic services on 12-Jun-2014 and plans grow its route network to service all Indian metropolitan centers and a selection of tier-II cities. AirAsia India is based at Chennai International Airport and operates Airbus A320 equipment.
AirAsia Investment Ltd owns a 49% stake in the LCC, together with Tata Sons Limited (30%) and Arun Bhatia of Telestra Tradeplace Pvt Ltd. (21%).
Location of AirAsia India main hub (Chennai International Airport)
LCCs will continue to evolve into hybrids of the original core model. CAPA and OAG consider AirAsia India fits the LCC profile and it is included in our reporting on this basis. Please note: when reporting for an airline is changed from or to LCC the historical data is not affected and it can lead to a distortion in the current reported data. Contact us if you have any queries.
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India’s decision to invite private capital to participate in the modernisation of its metro airports has delivered significant benefits for passengers, airlines and the government.
The two leading private promoters involved in the sector, GMR and GVK, have implemented dramatic improvements in airport infrastructure at Delhi, Mumbai, Bengaluru and Hyderabad which have transformed the passenger experience, improved efficiency and capacity for airline operators, and delivered a massive dividend to the state-owned Airports Authority of India.
Once India's new government is fully installed and a – hopefully – new approach to the aviation sector is bedded down, the prospects for innovation and improvement will grow exponentially. PPPs are one important part of that equation.
India's airlines are heading for another big loss in FY2015 - but good news may be around the corner
With market changing airline partnerships occurring, major new entrants arriving and the prospect of genuine reforms following an historic general election, FY2015 in India promises to be no less eventful than any over the past decade.
CAPA will release its annual India Aviation Outlook on 15-Jul-2014, covering the financial year to 31-Mar-2015. It promises to be as interesting – and turbulent – as ever, with new entrants AirAsia India, Tata-SIA, a new look Jet Airways with Etihad, Air India in Star Alliance and a probable IPO by IndiGo late in 2014.
In one of the world's most complex and challenging emerging markets, CAPA's India Outlook has become an invaluable reference tool. This brief review looks at some of the major financial issues facing India’s airlines.
AirAsia India has announced it will launch service on 12-Jun-2014. in this extract from the CAPA India Aviation Outlook Report 2014/15 we review the challenges and opportunities for the airline in this potentially massive market.
The short notice startup in AirAsia's joint venture - including 30% shareholder Tata - has surprised competitors and could gain the airline the advantage of the early mover.
AirAsia's experience across the region could well lead to the introduction of new norms into the Indian market; but speedy introduction of changes to the 5 year/20 aircraft rule will be necessary to securing the success of the airline in the medium term.
India's evolving global alliance mosaic: Star/SIA-Tata, oneworld/Air India-Qatar; SkyTeam/Jet-Etihad
Breathtakingly rapid changes in India are exposing a whole new panorama of the country's future international airline status. Just over two years ago, Star rejected Air India as a member, and the following year oneworld placed the admission of member-elect, Kingfisher on hold due to the carrier’s financial challenges. India's airlines were basket cases and its regulatory constraints promised to keep it that way. Today, thanks to some important (and long overdue) liberalising moves by the government, the country is shaping up as a potentially well balanced centre for each of the major BGAs.
Etihad clearly will have the first mover advantage, with its equity investment in Jet now having received regulatory approval to proceed, along with a substantial increase in seats in the Indian market. Meanwhile though, the long term pickings are so rich that other groups can no longer ignore the pressure to make a move.
All that is needed now is for India to remove its "5/20 rule" on international operations and - astonishingly - the country could leap from international dysfunctionality to commercial coherence in one bound. The impact for the national economy would be enormous.
But - there are one or two more barriers to be cleared. In India there always are. Perhaps this time the government will get it right, but don't bet on it just yet. And, although the alliances may be interested, they will remain wary of Indian pitfalls.
Singapore Airlines (SIA) has taken a major step forward in implementing its new long-term strategy with the proposed establishment of a joint venture carrier in India with Indian conglomerate Tata. The SIA Group will have a 49% stake in the new full-service carrier, giving SIA a major presence in a strategically important market. Tata will have a majority 51% stake, giving it a second carrier in its portfolio along with AirAsia India and a two-brand strategy that follows the formula increasingly used by airline groups throughout Asia.
For SIA, close involvement and equity in a new airline in India follows the acquisition of a 19.9% stake in partner Virgin Australia. Australia, India and China are SIA’s key markets and of strategic interest to the group as it increases focus on the fast-growing Asia-Pacific region. A partnership with and potential investment in a Chinese carrier is the only remaining missing major piece of the puzzle SIA has been working on since Goh Choon Phong took over as CEO at the beginning of 2011.
Mr Goh’s bold new strategy also includes investments in the budget end of the market, again with a focus on the Asia-Pacific region which comes as SIA tries to reduce its reliance on the long-haul passenger and cargo markets. SIA has recognised the opportunities in faster growing budget end with the launch of Scoot and increased involvement in Tigerair but also wants to maintain its leading position at the top end of the market, with continued investment in the SIA premium product and now a new full-service airline in India.
On 06-Mar-2013, India's Foreign Investment Promotion Board (FIPB) granted permission for AirAsia to invest in a proposed joint venture with the Tata Group and Telestra Trading to launch an LCC in India. AirAsia, seeking to expand its dominance beyond the ASEAN region, believes that its model, which operates under the ‘now everyone can fly’ mantra, is well-suited to the highly-competitive yet high-potential domestic Indian aviation market, which is expected to almost triple to 160 million passengers annually by 2021.
The quick decision by the FIPB and the clarification that foreign airline investment is not limited to existing carriers but is also applicable to start-ups is a welcome move. However FIPB approval is just the first step of the regulatory process and AirAsia India will now need to apply for a licence from the Directorate General of Civil Aviation (DGCA).
AirAsia India will enter the market as a well-backed group with the support of a USD100 billion conglomerate, the Tata Group, together with Telestra Trading. The LCC will operate with a strong focus on low-cost/low-fare operations in a market that AirAsia Bhd CEO Tony Fernandes says is “now ready for a true low-cost carrier”.