AirAsia plans to restart expansion, fly international by 2018

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New Delhi: AirAsia India, which is in the midst of a court case about foreign control and investments, plans to restart expansion and fly international by next year after regulatory authorities gave it tacit approval last month.

Aviation regulator Directorate General of Civil Aviation (DGCA) said in a 8 February ruling that it would not terminate AirAsia’s licence as the airline had not violated any rules. The order, however, noted that the airline’s budget, airfares, ancillary services and aircraft leasing among other things are approved by the parent AirAsia Group in Malaysia under the brand licence agreement signed between AirAsia India and AirAsia Group.

“The issues continue but the DGCA ruling on the brand license agreement was quite in our favour. We have always maintained it. It’s not new to us, it’s probably new to the competition,” AirAsia India chief executive Amar Abrol said at a media roundtable in Delhi on Thursday. “We are again getting ready for the second wave of growth.”

The Bengaluru-based airline plans to expand its fleet to 14 Airbus A320 planes by October from the current eight. These will be used planes and not from the AirAsia Group, Abrol stressed.

Planes previously used by US-based Frontier Airlines will be leased from the aircraft lessor who owns the plane. The airline will fly largely between metros and tier-II cities as it expands, Abrol said, adding that “the overall strategy is route dominance rather than getting hammered everywhere”.

Abrol said a new team was coming in to work on the international plans. “There is a project team coming in to get us ready for international. It will take us at least one year to get to international—so if not summer, autumn next year (we will fly international),” he said.

The airline will focus on South-east Asia, where it has several sister airlines under the AirAsia group providing ready infrastructure. “We literally don’t have to do anything we just have to land up in Kuala Lumpur… airports ready, staff is already there. It’s all there,” Abrol said.

AirAsia Indonesia is starting Bali-Mumbai flights, AirAsia Thailand is flying into Kolkata, AirAsia Malaysia is flying into Bhubaneswar and AirAsia X is looking at increasing its frequency to Delhi.

It only makes sense to marry the traffic so AirAsia India will tie-up with these airlines and make its network in such a way that they can sell common tickets, he said. For example a passenger can buy a Jaipur-Bengaluru-Kuala Lumpur ticket, where AirAsia India does the first leg and AirAsia Malaysia the second, he explained.

The sister airlines and AirAsia will gain 12% traffic each after these agreements are in place, Abrol estimated.

To be sure, the airline is yet to make profits and Abrol did not specify when it expects to become profitable. He said the next fiscal will be an investment year for the firm, and while the airline has already received two rounds of funding since inception, it will look at more funding at the end of the year if required as it goes international.

Tony Fernandes-promoted AirAsia Bhd, through AirAsia Investment Ltd, owns 49% in AirAsia India. The Tata group owns 49%, and two directors of AirAsia India—S. Ramadorai and R. Venkataramanan (both Tata loyalists)—hold the rest.

Bharatiya Janata Party (BJP) leader Subramanian Swamy, who sought the quashing of the airline’s licence by the court, that he was not convinced by the DGCA ruling and would pursue his case in the courts.

Abrol said he hoped 2017 would be better than 2016.

“By the end of the year we will have 1,800 people working for us. I am sure the government will take cognizance of investments, Make in India, people employed,” he said.