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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.
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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AirAsia is slowing expansion as it attempts to turn around struggling affiliates and restore profitability. Six of the eight AirAsia-branded carriers were unprofitable in 1H2015 with only the long established short-haul carriers in Malaysia and Thailand in the black.
Passenger traffic across the AirAsia family grew by only 6% in 1H2015 to 26.5 million. 2015 will almost certainly see the slowest annual traffic growth in AirAsia’s 14-year history.
2015 will also mark the first year AirAsia will shrink its fleet. AirAsia now plans to end 2015 with 193 aircraft, including 166 A320s and 27 A330-300s, compared to 197 aircraft at the beginning of the year. Extremely modest growth is now planned for the next three years, resulting in a fleet of 208 aircraft (177 A320s and 31 A330s) at the end of 2018.
A new government in New Delhi since May-2014 has brought heightened expectations of faster GDP growth, industry reforms and enhanced transparency. But with an entirely new team leading the Ministry and most of the government agencies involved in aviation, there is a lack of experience at the top. It will therefore take some time for the key decision-makers to grasp the complexity of the situation.
A clear roadmap is yet to emerge on the Indian government’s proposed institutional framework, a strategy for Air India and the Airports Authority of India, and the intended policy settings on critical issues such as bilaterals, economic regulation and route dispersal guidelines. However, indications are that the government will push ahead and abolish the five year/20 aircraft threshold for international operations, airport privatisation, construction of low-cost airports and corporatisation of air navigation services.
The Aviation Minister has also been encouraging state governments to reduce the onerous sales tax on aviation turbine fuel which currently averages 24%. This would be the single greatest benefit that the government could deliver to the industry.
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.