Jul 16, 2013

AirAsia To Grow India Joint Venture

Asia’s largest budget carrier AirAsia outlined plans to grow its Indian joint venture, including by adding 10 planes a year and focusing on flying new routes.


AirAsia chief executive Tony Fernandes said more than 50 staffs; including pilots and engineers have been recruited for the new no-frills airline, which plans to start operations in India later this year.
Fernandes said the new airline plans to add 10 Airbus A320s a year to its fleet, which will focus on routes in southern India, rather than Mumbai and New Delhi, before expanding elsewhere in the country.
India’s aviation has not grown. There are lots of routes which have not been done and lots of airports are under used,” Fernandes told reporters in Mumbai. “We will give the lowest possible fares,” he added.
Malaysia-based AirAsia won approval from India’s foreign investment panel in March to set up the airline in a joint venture with the giant Tata group and entrepreneur Arun Bhatia’s Telstra Tradeplace.
The new venture will be the first by a foreign airline since India relaxed foreign investment rules in September allowing overseas carriers to take up to a 49% stake in domestic firms.
AirAsia will own 49%, Tata group 30% and Telstra 21%.
Fernandes said making the new airline a success would be “challenging” but he was determined to persevere.
Low-cost carriers already dominate Indian skies with a near 65% market share.
India’s aviation sector, once vaunted as a symbol of the nation’s economic vibrancy, has seen its fortunes fade in the face of multiple problems including aggressive fare rivalry, a slowing economy, rundown infrastructure and high airport charges.
Last week, AirAsia terminated its joint venture with Japan’s All Nippon Airways as business slumped amid management clashes.
Fernandes on Monday called it a “bad partnership” but said he was open to looking for a new alliance.

Fernandes, a former record industry executive, took over insolvent AirAsia in 2001 and turned it into one of the aviation sector’s biggest success stories.

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