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B&E This Month
 
AIRASIA: PROFITS OR NOTHING AT ALL
AirAsia: Betting (none) on India?

Issue Date - 01/03/2014
 

Lessons for Indian carriers to learn. But learn they will little or none. AirAsia, over the past four years has shut its international flights to four Indian cities. The latest in the casualty list being Kolkata where Thai AirAsia stopped flightts starting February 2014. (In 2011, AirAsia stopped flying to Hyderabad; in 2012, AirAsia X closed operations to Delhi and Mumbai). So what’s the logic behind these shutdowns? A hike in charges and no real improvements in load factors that as the AirAsia management has remained at dismal levels, considering various macroeconomic factors. What is interesting here is the philosophy of air travel business followed by the AirAsia management. They halt flights to any destination that does not make money for them in 12 months from the date of business. The same was the case with all these four Indian cities. [AirAsia group currently operates 64 international flights per week to India, from Malaysia and Thailand and mostly connecting South Indian cities.] AirAsia India is yet to start operations. The joint venture with the Tatas will primarily focus on providing services to air travellers in the Southern parts of India, but you can be rest assured that if these very destinations don’t gain enough traction in terms of volumes and load factors for AirAsia (unless they can replicate the IndiGo business model), they will happily fly out of the already bleeding domestic air travel market in India.



          

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