Low-cost could mean low fares again with the impending entry of AirAsia India into the Indian aviation market.
At a time when fares offered by domestic budget carriers like IndiGo and SpiceJet are more or less the same as those offered by full service carriers such as Jet Airways and Air India and in some cases even higher, AirAsia India has said it would offer "some free tickets" — a move that could help it increase its market share.
"Hundred per cent," said Tony Fernandes, Group CEO, AirAsia, in response to a question on whether the proposed low-cost airline, which is eyeing an October launch, would offer free tickets.
Fernandes said the revenue management of Indian carriers was "very poor" and air fares were "just too high" in India. "We can go low. Our Kuala Lumpur-Kochi return fare is cheaper than Kochi-Delhi one way ticket," he said.
Fernandes said G Gopinath, India's low-cost pioneer and founder of Air Deccan, had got it right at the revenue level but got it wrong at the cost level.
"There is no point having low fares when your costs are higher than your fares. Gopinath did not have the balance sheet to take on the guys who had lots of cash and these people priced him out of the market. He didn't have the balance sheet or the profitability to fight them," added Fernandes.
While AirAsia India would allow passengers free check-in baggage up to 15 kg, Fernandes maintained that there was no such thing as "free". Full service carriers don't give passengers free food, passengers pay for it in their ticket, he said.