Breaking into Indian domestic aviation space, AirAsia India Thursday launched its operation with a flight from here to Goa in a foray that is expected to intensify the fare war among the no-frill airlines in the loss-hit sector.
AirAsia India, the Indian arm of Asia's biggest budget carrier Malaysia-based AirAsia Bhd, became the fourth low-cost carrier in the country after IndiGo, SpiceJet and GoAir, as its maiden afternoon flight took off from the Kempegowda International Airport on the outskirts of the city.
Ahead of the launch of operation, the airline already offered a promotional fare of Rs 990 for flights between the two cities, signalling that it would make the rivals fight more bitterly to protect their turf.
AirAsia is headed by Tony Fernandes, a millionaire former music executive.
"Our long-term goal is to offer air travel at affordable rates and provide an opportunity to every Indian to fly. Our competition is with the Indian Railways and not with other airlines in the country," AirAsia India Chief Executive Officer Mittu Chandilya told reporters here.
He added, "Our fares will be 35 per cent lower than the market rates. At this rate, we believe we can sustain... We intend to bring down the tariff further as we are sure that we could make revenues with stable operations."
According to Directorate General of Civil Aviation data for April traffic, IndiGo dominates the local market with 31.6 per cent share, followed by Jet Airways-JetLite combine with 21.8 per cent and Air India with 18.3 per cent. SpiceJet had a 17.9 per cent market share and GoAir had 9.5 per cent.
Malaysia-based AirAsia currently operates international routes into Bangalore, Chennai, Kochi, Kolkata and Trichy.
Weighed down by mounting operating costs, including for fuel, all barring one the country's half-dozen airlines are suffering losses in the domestic sector.
AirAsia, one of the most successful low-cost carriers in the world, got the aviation ministry's flying permit on May 8, the last of the many approvals needed for the airline to take off after a nine-month long wait marked by legal hurdles.
AirAsia India is a 49:30:21 joint venture among Malaysian carrier AirAsia, Tata Sons and Arun Bhatia's Telestra Tradeplace.
AirAsia had announced its joint venture with Tata Sons and Telestra Tradeplace in February 2013, four months after the then UPA government allowed up to 49 per cent FDI in domestic airlines by foreign carriers.
"Our first service on-board A-320 of Airbus is going full, as we have sold all 180 seats within minutes after booking was opened on our website on May 30," Chandilya said.
As part of the promotional offer, 40 per cent of the tickets were sold at Rs 999 and 10 per cent at Rs 5 per ticket and the balance were sold up to Rs 1,999 per ticket, he said.
Chandilya said AirAsia India would commence the second flight to Chennai from Bangalore on June 19 and planned to connect nine regional cities with Bangalore, including Jaipur, Mangalore and Hubli, within the next three months.
"We have given our list of cities that will be connected to the regulator and waiting for the approval," he said.
He also said they plan to develop their hub in Bangalore and discussions had been held with Karnataka government for concessions on Aviation Turbine Fuel (ATF), on which the taxes Karnataka are very high at 29 per cent.