Mittu Chandilya, Chief Executive Officer, AirAsia India in an interview to CNBC-TV18 said the airlines is aiming for a 10% domestic market share in the next one year and expects to break even in the next few months.
According to him 30-35% lower fares compared to other airlines is sustainable, and feels one has to be disruptive in pricing if one has to penetrate market.
AirAsia wowed travelers, while making competitors sweat under the collar, with a Rs 990 introductory price tag (including taxes) for its maiden flight on Bangalore-Goa route on June 12.
He said the airlines plans to fly to all metros expect Mumbai as of now due to inadequate infrastructure but would look at it within the next six months. Delhi could also take a bit more time. The airlines would also be looking at flying to all the tier II cities wherever they can fly A320.
Currently, the company has one aircraft which hey would be flying for initial first few routes till they get additional aircrafts within a couple of months, said Chandilya.
According to him the aviation industry is likely to see a growth of 20 million passengers this year.
Below is the transcript of Mittu Chandilya's interview with Sonia Shenoy of CNBC-TV18.
Q: Everyone is interested in the pricing that you have announced but before that just take us through the first routes that AirAsia will fly and what will be your fleet size?
A: The first route that we are going with is Bangalore-Goa and Goa-Bangalore and that will be on the June 12 and we are opening up for bookings at 9:30pm today. We are very excited about that route because it matches who we are as a brand and from a marketing standpoint it is very close to who we are. Tony's Fernandez father comes from Goa so it is a nice way of saying a good thank you to him.
Bangalore is something that is close to the Tata's heart with Tata Consultancy Services (TCS) and all a lot of the other businesses being out there. So, it just made a lot of sense for us to do this route.
In our fleet we have one aircraft which is sitting out here and it is an opportunity for us to run that aircraft for that initial first few routes and then ultimately we will get additional aircrafts within a couple of months time.
Q: Is it true that you will be skipping the Mumbai flights because of inadequate infrastructure in the financial hub of the country?
A: Yes, that is right. We would not be coming to Mumbai at this point.
Q: In the next six months what are the other routes that AirAsia will be flying to and from?
A: I would say at this point twice because we are looking at all opportunities and if Mumbai makes sense for us within six months period we would look at that.
We are looking at every other city that you could think about; the same ones that I had announced previously which would be all metros with the exception of Mumbai at this point. Maybe Delhi not so immediately but it could come up very quickly and then all other tier 2 cities which have an avenue for us to fly an A320 into. So, our route map is actually quite comprehensive and quite exhaustive. We have looked at every option there and we would be very excited about any of those cities.
Q: You said earlier that you would be disruptive in pricing. What does that mean? Is this 30-35 percent lower fare sustainable or is it just introductory pricing?
A: We honestly believe that with the cost structure that we have, we can sustain the 30-35 percent fare drop compared to any of the other airlines. I believe that you have to be disruptive; you have to be disruptive all the time. I think that 30-35 percent would be disruptive and we will continuously look to see how we can bring that even lower.
Q: When you say even lower what do you mean, how much lower could it get and will this unleash a wave of fare wars in the aviation sector?
A: I think the fares could go fairly low. Now the question you should probably be asking though is, is this sustainable? - I believe that with our model and with our cost structure it is very sustainable and I truly believe in that. I am not doing this as a gimmick fare where we just do that for a certain amount of time,create a buzz and then backout out of it.
It has to be sustainable, we need to be able to hold the fare at that level and I believe that with our model and our cost structure there is avenue for us to keep doing that.
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