Low-cost airline Air Asia India launched its first domestic flight from the city’s Kempegowda International Airport on Thursday, with its CEO Mittu Chandilya calling Bangalore its hub for expanding to more Indian cities.
Chennai would remain the corporate and maintenance base of the airline, co-promoted by Tata Sons, Mr. Chandilya told a media briefing ahead of the afternoon take-off, a fully loaded, brand new Airbus A320 flight officially numbered I51320, from Bangalore to Goa’s Dabolim airport.
The high tax rate of 29 per cent on aviation turbine fuel was a deterrent and Air Asia had urged the Karnataka Government to reduce this, he said.
Air Asia would operate its next trip at dawn on June 19 from Bangalore to Chennai. It has a lone Airbus A320 aircraft. Two more brand new A320s would join in a month or two. The carrier planned to add an aircraft a month over the next ten months.
In about three months, it would add nine new segments mostly in the south, including Mangalore, Hubli and Jaipur where airports can take in A320s. Over three years, it would fly to 30 cities.
Some of the new destinations would be announced next week; the carrier was awaiting the approval of the regulator, the Directorate-General of Civil Aviation, of them. “Our focus will be Tier-2 cities and we are not keen on ‘trunk’ routes [to Mumbai, Delhi or Kolkata],” Mr. Chandilya explained.
On the maiden flight, he said, “Our first service is going full. We sold all 180 seats within minutes of opening bookings on our website on May 30. As a promotional offer, we sold 40 per cent of the tickets at Rs.990, 10 per cent at Rs.5 per ticket [excluding taxes] and the balance were sold up to Rs.1,900 per ticket”.
The provocatively priced offer has already influenced some of its competitors on the fare front.
The 300-staff airline has shifted its pilots, crew and office to Bangalore. “Over the years we will invest and develop our hub here [with the fleet based at KIA.] Bangalore’s airport is excellent. I am interested in being here. I have moved the entire team here and am putting in contracts which are very Bangalore-centric.”
However, “Karnataka’s taxes on the aviation turbine fuel are very high at 29 per cent.
“We have had discussions with the State Government for providing tax concessions on ATF. [It] has promised to look into the taxes and bring them down,” Mr. Chandilya said.
The Indian venture of the Malaysian airline has an initial Rs.90-crore ($15-million) investment from Air Asia Berhad (49 per cent); Tata Sons (30 per cent); and Telstra (21 per cent); it would go up to $20 million (around Rs.120 crore), the CEO said.
On how it would recover its investment at such low fares, he maintained, “We will break-even in four months… Our fares will be 35 per cent lower than the market rates. At this rate, we believe we can sustain and be profitable” as operations and revenue stabilise.
AirAsia’s Indian venture was approved in February 2013; it got its first plane in March this year and its operating licence in May.
