India will be no different a market, says the AirAsia Chief Executive, Mr Tony Fernandes, having balanced the act of flying people at low fares and yet making profits.
For him, the definition of low cost is a “one rupee fare”, not once in a while, but constantly. Mr Fernandes' plans here, however, are not limited to just aviation.
It extends to budget hotels and may be even hospitals, at a later date, says Mr Fernandes, an Indian by origin, with memories of his first cricket century in Eden Gardens, and playing football for Mohun Bagan.
“Tune Hotels”, as the low-cost chain is called, envisages 20 hotels in India, over the next couple of years, at an investment of about Rs 90 crore.
Often challenged that the “low cost airline model will not work in India…it's different!” – the unfazed Mr Fernandes responds: “it's not”.
“There are a billion people here. My country (Malaysia) has 24 million people. One million people use your trains everyday…I cannot believe a low cost business cannot work here,” Mr Fernandes told Business Line.
Promotional fares
As a practice, AirAsia has 30 per cent of its inventory for promotional fares. If someone working in Malaysia, with his home in India, can go over for the weekend on a five- and-a-half-hour journey – “you've changed the way…That's the low cost carrier. I don't think any of the Indian low-cost carriers transformed travel,” he says.
On problems of high airport charges, the aversion to booking tickets online – issues associated with India, he observes: “It's exactly the same as when I started in Malaysia. Everyone said no one would buy on the Internet because they are used to booking through travel agents…You put a one rupee fare on the Internet, they will come. Indians are no different from anyone else in the world, right?”
Metro-centric
Domestic airlines are too focussed on the metros, he says, adding: “We went to Tiruchy first (in 2008)… There are tonnes of routes that are never done in India, tonnes of airports that are underutilised”.
The problem with Indian aviation, he feels is people have given up too quickly. “Just stick at it. Don't give up so quick,” says the man who bought AirAsia with two ageing Boeing 737 jets and $11 million worth of debts for 26 cents.
It is a hard business, he agrees, but harder still is the politics of this business. He quips: “We compete against the national carriers. Which for some unknown reason are untouchable,…..it's like demi-god,” says Mr Fernandes.
But he has a good word for local counterpart, Paramount Airways, who feels, has the “right model” but “wrong aircraft”. Not known to mince his words, he describes some other players as “flamboyant guys”!
This business requires focus and attention, “You cannot sit in your office without getting down to the floor,” says Mr Fernandes, known to spend time with his ground staff and crew, besides listening to passengers.
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