Friday, April 26, 2013

Will AirAsia get approvals to begin Indian operations soon

Malaysia's Air Asia has plans to launch operations in India as early as this year. The airline is pro-actively trying to complete bureaucracy related formalities so that it can begin operations in smaller towns and cities with an Airbus fleet.

After getting a formal approval from the Foreign Investment Promotion Board (FIPB) to set up an airline in the domestic market, the airline is learnt to have submitted an application to launch low cost airline in India along with Tata Sons and Telestra Tradeplace in a 49:30:21 partnership.

Earlier, there was a talk that the aviation ministry had disapproved AirAsia\'s India entry on grounds that Tata Sons should have first set up an airline company, obtained a flying permit and then should have offloaded stake to it. But later, the foreign investment proposal panel okayed the venture.

The airline, which will be based out of Chennai, hopes to begin operations by in small towns and cities where traffic seems to be increasing around 20 percent annually as per rough estimates. The airline plans to induct over 35 airbus aircraft over next five years with AirAsia having operational control of the airline, while Tata Sons will be a minority investor with operational role.

AirAsia\'s plans to set up an airline in India took off after the government last September relaxed investment norms in the sector and allowed foreign carriers to purchase up to 49 per cent in domestic airlines.

The airline has even started recruiting cabin crew and pilots as it gets ready to spread wings in Indian skies. Infact, there was a talk that after AirAsia launches operations, there can be a price war as the airline has a successful low cost model, which is famous amongst travellers in South East Asia. The airline will surely replicate its business model in India and this could be a threat to Indian players who are finding it difficult to lower fares due to high operating cost.

Even as its plan to launch an airline in India is yet to fructify, the Malaysian carrier had recently announced upto 70 percent discount on international flights from India. The airline offered two million seats under the scheme for bookings done between April 2-7 for travel period beginning January 1 to April 30 next year. The airline has a network in 18 countries covering 85 destination with one of the youngest aircraft fleet in the world

According to CNBC-TV18, even Airasia Expedia sees its low-cost carrier partner AirAsia\'s entry into India an opportunity to augment its growing business from within the country.

There seems to be lot of excitement in the Indian aviation space with Etihad picking up 24 percent stake in Jet Airways for Rs 2060 crore. While media reports suggest that Qatar Air may pick up stake in Delhi\'s SpiceJet as both parties are conducting meetings for the purpose.
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