Monday, July 21, 2014

AirAsia India: Break-even target ambitious, say experts

Mumbai: AirAsia India will get a cost advantage over other airline start-ups. For, it can rely on its parent for aircraft lease, maintenance support and training.

Even so, its aim of achieving break-even in six to 12 months is difficult, say experts.

Initially the airline was aiming to achieve a break-even in four months; recently, it pushed back the target. The head of investor relations of AirAsia Malaysia, the parent company, said it was not possible for the Indian subsidiary to reach break-even before eight months. And, the group chief executive officer, Tony Fernandes, said the break-even would be achieved in a year.
AirAsia India has a single Airbus A320 and operates six flights between Bangalore and Chennai and Bangalore and Goa. It has announced a Bangalore-Kochi flight from Sunday.

AirAsia Malaysia has among the lowest unit costs (cost involved in flying a seat over a kilometre) in the world and has invested in programmes to reduce it further. This includes a programme with GE Aviation, aimed to help in saving $20 million in five years. However, operating costs in India are high and AirAsia will not enjoy the cost advantage it gets in its Southeast Asia market.
21/07/14 Aneesh Phadnis/Business Standard
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