Asia’s biggest budget carrier AirAsia is set to make its maiden Indian flight this week, fueling a cut-throat fare war in a sector already reeling from losses.
AirAsia India is to take off on Thursday with an eye-catching promotional fare of 990 rupees (US$17) for flights between high-tech hub Bangalore and the popular coastal resort of Goa — cheaper than a second-class train ticket.
“The price war has already begun and will only intensify in the lean July-to-September quarter,” said Amber Dubey, partner at global consultancy KPMG.
The carrier’s founder and chief executive, Tony Fernandes, a millionaire ex-music executive who styles himself as Asia’s answer to British tycoon Richard Branson, is a hardened discount-fare warrior.
However, analysts warn that Fernandes could find the ride more turbulent than he reckoned in India, where no-frills carriers already dominate with a near 65 percent market share in the country of 1.2 billion people.
The company is to start with just one plane — less ambitious than the three-to-four aircraft first envisaged — but aims to scale up to 10 planes and 10 cities by the end of the fiscal year in March next year.
Malaysia-based AirAsia, whose net profit leapt 33 percent to 140 million ringgit (US$43.6 million) in the past quarter, is hoping to break even in India within four months through ambitious operational targets.
It plans to achieve an aircraft turnaround time — the time it takes to unload one set of passengers and board another — of 20 minutes, far lower than the 30-to-35 minutes of the best Indian low-cost airlines.
It also aims to have its plane flying 16 hours a day in contrast to the global industry level of 13, and significantly higher than the 12 hours achieved by AirAsia in the wider region.
The Indian launch of AirAsia “affirms India’s reputation as a lucrative aviation market in the long run,” Dubey said.
Even though airlines are making losses at present, passenger numbers are expected to triple to 452 million by 2020 to 2021, according to Center for Asia Pacific Aviation (CAPA).
“But if an unbridled fare war continues ... we may see financial distress increasing and the probable exit of one or two airlines in the next 12 to 18 months,” Dubey said
All but one of India’s half-dozen airlines are hemorrhaging losses, and AirAsia’s plan to pitch its fares 30 percent below those of even low-cost rivals will create new strains.
The Federation of Indian Airlines made a final appeal last week to the new government led by Indian Prime Minister Narendra Modi to stop AirAsia taking flight.
“While foreign investment needs to be encouraged, the same cannot be at the cost of the domestic industry,” federation’s associate director Ujjwal Dey said.
Fernandes, who calls himself a “disruptor,” tweeted in reply: “Some airlines scared of us. We must be doing something write” (sic).
Indian budget rival SpiceJet, which posted a record loss of 10 billion rupees last year, has cut fares on southern routes and blasted AirAsia’s “predatory pricing.”
Indigo, the only money-making Indian carrier, has followed suit, with promotional fares of just one rupee plus taxes.
“Indian carriers have a track record of engaging in unsustainable fare discounting and an unusual willingness to bear losses,” said Kapil Kaul, head of India operations for CAPA.
Fernandes, who rescued Air-Asia from near collapse in 2001 and turned it into a success story, “may have under-estimated the capacity of Indian carriers to pursue irrational pricing,” he said.
Aside from the ferocious competition, Fernandes faces other challenges — among them the fact India is an expensive place to operate an airline.
Carriers pay 50 percent more for fuel than in Bangkok, Dubai, Kuala Lumpur or Singapore because of hefty state taxes, while airport charges are also high.
Fernandes also may soon be shopping for a new partner as analysts say the Tata conglomerate could pull out of the venture because it has since tied up with Singapore Airlines to start Tata-SIA Airlines Ltd, a full-service carrier.
Among the rows of vibrators, rubber torsos and leather harnesses at a Chinese sex toys exhibition in Shanghai this weekend, the beginnings of an artificial intelligence (AI)-driven shift in the industry quietly pulsed. China manufactures about 70 percent of the world’s sex toys, most of it the “hardware” on display at the fair — whether that be technicolor tentacled dildos or hyper-realistic personalized silicone dolls. Yet smart toys have been rising in popularity for some time. Many major European and US brands already offer tech-enhanced products that can enable long-distance love, monitor well-being and even bring people one step closer to
Malaysia’s leader yesterday announced plans to build a massive semiconductor design park, aiming to boost the Southeast Asian nation’s role in the global chip industry. A prominent player in the semiconductor industry for decades, Malaysia accounts for an estimated 13 percent of global back-end manufacturing, according to German tech giant Bosch. Now it wants to go beyond production and emerge as a chip design powerhouse too, Malaysian Prime Minister Anwar Ibrahim said. “I am pleased to announce the largest IC (integrated circuit) Design Park in Southeast Asia, that will house world-class anchor tenants and collaborate with global companies such as Arm [Holdings PLC],”
Sales in the retail, and food and beverage sectors last month continued to rise, increasing 0.7 percent and 13.6 percent respectively from a year earlier, setting record highs for the month of March, the Ministry of Economic Affairs said yesterday. Sales in the wholesale sector also grew last month by 4.6 annually, mainly due to the business opportunities for emerging applications related to artificial intelligence (AI) and high-performance computing technologies, the ministry said in a report. The ministry forecast that retail, and food and beverage sales this month would retain their growth momentum as the former would benefit from Tomb Sweeping Day
Thousands of parents in Singapore are furious after a Cordlife Group Ltd (康盛人生集團), a major operator of cord blood banks in Asia, irreparably damaged their children’s samples through improper handling, with some now pursuing legal action. The ongoing case, one of the worst to hit the largely untested industry, has renewed concerns over companies marketing themselves to anxious parents with mostly unproven assurances. This has implications across the region, given Cordlife’s operations in Hong Kong, Macau, Indonesia, the Philippines and India. The parents paid for years to have their infants’ cord blood stored, with the understanding that the stem cells they contained