AirAsia India, which got the flying permit from the aviation regulator Directorate General of Civil Aviation (DGCA) on Wednesday, plans to break even within four months of its launch, chief executive officer Mittu Chandilya said in an interview with Hindustan Times. Excerpts:
How will you manage to offer cheaper fares?
Our fares will be around 30% cheaper. While majority of the costs are the same like fuel, airport charges and pilot salaries, the differential is on everything else. The recipe is in little things around as opposed to one big-ticket item. Everything from administrative costs to spending on paper….if you put all together you can easily get about a 10% differential.
Do you expect to make profit despite offering cheaper fares?
Absolutely. I want to break even within four months, no later than that.
Isn't that early?
That's the target to myself and that's the same target I have given to the board, to say what we need to work at. It's an aggressive task but I truly believe we can do it.
Your views on Indian airlines opposition to AirAsia?
It's unfortunate that they are pushing the regulatory hurdles to block us. It's a bit disappointing but that has given us motivation and we can show them what we are all about.
What are your views on the fares being offered by Indian carriers?
I think the fares are extremely high and there is too much of parity. Fares two days before bookings are almost identical (for all the airlines) and that needs to change. I think the fares will be all the more competitive (with AirAsia's entry) and all the current airlines would be pressed quite a bit.
Fares offered by the budget carriers are more or less similar to full service carriers. Is that going to change with AirAsia's entry?
Hundred per cent we are going to change that. Low cost for me is about keeping the cost at a point where the fares can be extremely low and that's unfortunately what seems to be missing here.
What made you change plans about Delhi?
I think we were always looking at Delhi and Mumbai. Delhi for me is an attractive proposition. There is a thin line between being a national player and a regional player and Delhi might be it.