AirAsia Zero Fare Scheme to Set off a Fare War in the Coming Months

AirAsia is all set to enter into the Indian commercial aviation industry in October and has some interesting fare-related schemes up its sleeve like the zero fare deal. This initial promotional fare scheme is in all likelihood to woo customers of other Indian carriers. This is likely to spark an interesting lowest airfare war among several airlines in the country. The officials of AirAsia believe the opportunity for them in India is big as more than 70 million Indians travel by air annually.

The Malaysia-based, AirAsia got interested in starting its services in India when in September 2012, the civil aviation ministry gave approval for foreign direct investment (FDI) in the aviation sector. According to initial reports, 49 per cent ownership of this airline in India is with AirAsia, followed by Tata Group with 30 per cent and Telestra Tradeplace with 21 percent.

AirAsia has planned to begin its operations in tier II and III cities of south India with three aircraft and subsequently, ten in the following year. The airline aims to encourage more people from small cities to fly with them and thus, plans to keep fares of flight tickets relatively competitive to woo those travellers who avail road and rail transportation as of now. However, fares are more likely to be in the price range of two tier or three tier compartments of express trains.

The airline has also decided not to operate to and from Mumbai and New Delhi owing to high airport development charges of these airports. Another reason is that the air congestion at the Mumbai Airport is quite high that makes landing time-consuming. Once AirAsia successfully launches its services in the country, it will shift it focus to operate international airlines from India; however, it may not be so soon. As per the guidelines laid down by the Indian government, an airline can only start its services to foreign destinations after completing five years of operations within the domestic boundary.

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