AirAsia to invest $30 mn in India joint venture, to offer free tickets

AirAsia CEO Tony Fernandes has said his low-cost carrier plans to initially invest $30 million in its Indian joint venture airline with the Tata Group.

Addressing a press meet in the national capital on Wednesday, Fernandes said: "The potential of India was always there in my eyes. I was waiting for the market to become conducive for us so that we can stay here for a fairly long time and I think the tide is now turning very quickly. So we felt that this is the right time to come to India."

Fernandes is hopeful that the airline operations can start from October.

He met Civil Aviation Minister Ajit Singh on Tuesday with AirAsia India board advisor Ratan Tata. The company has already applied for a no-objection certificate.

Asked how much marketshare the company has been eyeing in the Indian low-cost carrier space, Fernandes said: "I am not here to take away marketshare. But given India's potential of 1.3 billion population, this could be the largest AirAsia operation."

The company is planning to start from south India, with Chennai as its head office.

Fernandes mentioned that the airline can have many bases in the southern part of the country like Bangalore, Chennai and Kochi. He added that the ministers in south India were cooperative with him.

"A small thing, which we can do is to inform and educate the people about benefits of their travel. We are not here for vested interest, we are here to deliver. I see ourselves emerging as a vibrant airline company with two-three big players eventually."

Fernandes plans to further bring down airline fares in India as he feels these are now ruling at a higher range. He pointed out that many domestic airline fares in India are higher than travelling to international destinations by AirAsia. The company also plans to look at international routes from India as Fernandes feels that "India is a fantastic location to connect to Africa and the Gulf countries".

Putting a lot of thrust on bringing down airfare, to make it more affordable for the common man, he said: "My dream is to replicate our tagline 'Everyone can fly', where every common man has flown, like in Malaysia. Competition brings more choice."

He plans to offer even a few free air tickets when the airline starts operations in India.

"The maids are going home every two-three months because of AirAsia in Indonesia, Malaysia and the Philippines. We have transformed quality of life for labour force . We are unbundling the fare and by giving you (passengers) the choice of whether you want it or not, we will enable more people to fly," Fernandes said.

The recruitment process for the Indian operations has started, AirAsia India head Mittu Chandilya confirmed. "We are recruiting around 200 people initially. We are hand-picking people."

Fernandes told IANS that the company is getting applications from the defunct Kingfisher Airlines' now-jobless ex-employees as well.

Speaking about aviation turbine fuel (ATF) prices, Fernandes said though these were 30 per cent higher in the Indian market, the company will find ways to mitigate this.

AirAsia is also eyeing an entry into the the Indian insurance market through its Tune Money venture. Tune Money is into travel protection plans and lifestyle protection plans.

It is also planning to expand its Tune Hotels - budget hotels - in India. At present it has one in Gujarat.

OTHER HIGHLIGHTS OF THE PRESS CONFERENCE:

- Company will allow upto 15 kg of free luggage like any other Indian carrier.

- It is looking at redistribution of tickets in India through both online and offline channels. AirAsia runs a joint venture portal with Expedia and it is an exclusive online distribution channel for the airline.

- Fernandes feels Air India should not be in the hands of Indian government anymore, it should be with a private player.

- AirAsia is looking at leveraging Tata Group's experience in handling Indian politico-economic scenario into the new airline JV.