Flyers in India will now have more options to choose from as AirAsia India has finally got the licence from aviation regulator Directorate-General of Civil Aviation (DGCA) to start commercial operations in the country after months of delay and litigation.

The announcement was made by AirAsia India’s Chief Executive Officer Mittu Chandilya on Wednesday on his official Twitter page. “Boom! 1815 hrs (IST) today AirAsia India was born.

So proud of my team! Who is ready to revolutionise Air Travel in India?” he tweeted.

In April last year, the Foreign Investment Promotion Board had approved the $30 million deal to launch AirAsia India, a joint venture between Malaysian carrier AirAsia, Tata Sons and Arun Bhatia’s Telestra Tradeplace Private Limited. The airline had also received a no-objection certificate (NOC) from the Civil Aviation Ministry last year.

Airline’s parent company Malaysian carrier AirAsia CEO Tony Fernandes also tweeted, “History has been made today in aviation. Everything has been hard for AirAsia but we never give up. Today, AirAsia India has got approval”.

In a following tweet, Mr. Fernandes also twitted a picture of Mr. Chandilya with the permit, saying, “Our CEO @MittuChandilya with Air Operators permit. What a battle that was. Proud day for me and all AirAsia stars.”

The airline would initially focus on connecting non-metro towns and hopes to replicate its low-cost, no-frills model here that has seen considerable success in Southeast Asia.

AirAsia India will now have to get its schedule cleared by the DGCA before it can open bookings to begin commercial operations. The final clearance by the DGCA came in February after it disposed the objections that were filed by various parties, including Federation of Indian Airlines, Subramanian Swamy and others, to the carrier being given the permit.

Some headwinds

Aviation experts have welcomed the grant of Air Operator Permit (AOP) to Air Asia India but felt that the new airline would face headwinds in India.

“We welcome DGCA decision. It has been a long ordeal for Air Asia India as the wait to get regulatory clearances has taken 15 months. We also expect legal challenges to continue,” said Kapil Kaul, CEO, South Asia, Centre for Asia Pacific Aviation (CAPA).

According to CAPA, Air Asia India should start operations from September/October as starting in the second quarter could result in lot of cash burn and this would impact the airline’s start-up capital which as it is very conservative.

“Air Asia India may not be fully prepared for an early launch and shouldn’t rush for an early launch. More recruitment has to be done, start-up training, logistics at each operating station to be set, slots have to be approved , schedules to be marketed within their distribution system and possibly other requirements to be addressed,” Mr. Kaul added.

Pricing structure

“I also expect a very aggressive pricing structure especially the advance purchase market will get stimulated. Air Asia will face a very hostile competitive environment and will be severely tested in the market,” Mr. Kaul added.

“The grant of AOP was expected but still it is good news for flyers. The industry would like to see Air Asia India building a sustainable story on the back of their initial foray.

“The challenge is how they would grow profitably,” said Peeyush Naidu, Senior Director, Deloitte India.

Keywords: AirAsiaDGCA

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