AirAsia India to start flights on Delhi-Mumbai route

NEW DELHI: The Indian unit of AirAsia will soon start flights from big cities, changing its strategy of connecting smaller cities to take on competition which followed the airline wherever it went since launch of operations earlier this year.
AirAsia India, which started with connecting cities like Chennai, Kochi, Goa, Chandigarh and Jaipur from its hub in Bangalore, plans to start operations from key cities like Delhi and Mumbai. The airline had earlier announced that it wouldn’t operate from these cities because of high airport charge.

"We had earlier decided to operate between smaller cities and develop markets but the competition is following us everywhere. Now, we have decided to take on competition in their big markets like Delhi and Mumbai by announcing our flights soon," AirAsia India Chief Executive Mittu Chandilya said.

Since its launch, AirAsia has been facing severe competition from other domestic carriers. Days after it announced Bangalore as its hub, other airlines ramped up operations from there. Competition followed it on the Bangalore-Jaipur sector too, launching new flights. Analysts say AirAsia's new strategy will help it grow faster in India.

"The shift in strategy to bigger cities is a perfect move and will help the airline in more ways than one. It will fetch market share for the airline, help it break even much faster and, above all, will provide much better visibility to the airline," said Girish Jakhotiya, chief consultant at Jakhotiya & Associates, a strategy consultancy firm.

"Aggression is the best defence and AirAsia India is doing the right thing by moving into the competition's market to take them on." This change in strategy has, however, slowed the capacity-addition plan of the airline, which will now operate a fleet of five aircraft until end-December. It initially had a target to have 10 planes by the end of 2014, which was later cut to six.

"Now, the sixth aircraft comes only in January," said Chandilya. He said all AirAsia India's flights, with the exception of Bangalore-Chennai, are generating cash. "The Bangalore-Chennai flight is not making money because we are pricing it less due to competition from other modes of transport that are available in abundance between the two cities." AirAsia India, which started flight operations in this June, has been unable to meet its target of breaking even in the initial months itself.

The AirAsia Group recorded a Rs 25 crore loss in the second quarter for AirAsia India, consultancy Centre for Asia Pacific Aviation said in a report in August.