AIRASIA INDIA: CLASH FOR THE

INDIAN SKIES
May 7 2014- AirAsia received Air
Operators Permit.
AirAsia India pursues aggressive
pricing strategy, competitive
operational targets

The Indian Aviation

Industry
Tata Sons Ltd. started in 1915, renamed as Air
India in 1946
Airlines sector nationalized under the Air
Corporations Act 1953
Act was revoked in 1994, enabling the entry of
private carriers
In 2003, Air Deccan, Indias first LCC emerged
In 2008, foreign equity participation was allowed
In September 2012, the FDI norms were relaxed
AirAsia India 3 way joint venture Tata group,
AirAsia and Telestra Tradeplace

The Indian Aviation Industry

373% increase in passengers carried by domestic
operators
290% increase in passengers carried by international
services
PLF increased from 55% to 75%
Fastest growing aviation and 9th largest civil aviation
market in the world in 2013
Domestic passenger throughput estimated growth at
12% pa
International passenger growth at 8% pa
3rd largest civil aviation market in the world by 2020
Increase in ASK-RPK gap after 2005-06

Indian Aviation Industry

challenges

High airport charges

High taxes and fees
Lack of adequate infrastructure
High ATF cost in India
Sensitivity of industry profitability to oil prices
Exchange rate volatility
Policy rules
Lack of skilled manpower
Slot allocation policy
Pricing strategies

Key Drivers of growth in

Industry
Growth in National Income
Growth of the middle class
Growing urbanization and shifting
demographics/growth in working-age
population
Investments in airports and related
infrastructure
Untapped market potential

LCC in India
Air Deccan introduced low cost
model in 2003
no frills services.
In 2013,60% market share held by
LCC
LCC in India paid 13% higher airport
related costs

LCC in India
2013-14
NACIL
Jet Airways
Jet lite
Air sahara

19.1

29.5

Air Deccan
Kingfisher

17.1
9
19.8

99

0
5

95

0
29.1

70.9

FSC
0
41

59

LCC
0
45.7

54.3

low fare
5.4
23.9
42.3
39.4
52.3

36.7

24

Indigo

54

63

46

37

44.6
31.4

Goair
Paramount

5.4

Changing Market Scenario

0
1

Spicejet

Airasia Berhad ( Or Airasia)

Worlds best low cost airline and

pioneer of low cost travel in Asia.
Established in 1994 and is
Headquartered in Kuala
lumpur,Malaysia
Has scheduled domestic and
international flights to 83
destinations across 17 countries.

Airasia low-cost model

Cost per available seat kilometre of 13
Sen (US S0.04) in 2012/13r.It relies on
ancillary and adjacency income streams.
Cost out avoidance (COA) program since
2012
lowers cost by optimizing crew, superior
airline management system
Baggage self tagging service
Better management of fuel consumption

AIRASIA INDIA
Offers fares 35 per cent cheaper than
competitors
Airasia first aircraft, a 180 seater,
had arrived in Chennai in march
2014
Would air Asia aggressive pricing
work in India?