Monday, Nov 24, 2014

Analysts, rivals doubt AirAsia India strategy, term it ‘unrealistic’

AirAsia India has received an air-operator’s permit from the DGCA on Wednesday. AirAsia India has received an air-operator’s permit from the DGCA on Wednesday.
Written by Mihir Mishra | New Delhi | Posted: May 9, 2014 9:53 am | Updated: May 9, 2014 9:55 am

EVEN as AirAsia India has claimed that it would bring about a new operational standard with its launch, industry analysts and competitors have termed it as “unrealistic”.

AirAsia India, which received an air-operator’s permit from the Directorate General of Civil Aviation (DGCA) on Wednesday, has claimed to achieve an aircraft utilisation of 16 hours and an aircraft turnaround time of 20 minutes.

Turnaround time is the time between the landing and take off of an aircraft, which includes the time taken to disembark one set of passengers and boarding the next set, as well as loading and unloading of cargo. Analysts do not see the airline achieving this magnitude of utilisation on the domestic network.

“The daily utilisation of 16 hours only for domestic is not feasible unless international routes are included but that also might be achievable for some aircraft and not the entire network. Our recent assessment shows that utilisation of about 12 hours plus is achievable but operational constraints will impact anything beyond the same,” said Kapil Kaul, CEO of Centre for Asia Pacific Aviation. He added that the turnaround of 20 minutes at metro airports is also not “realistic especially since Delhi is part of the network”.

Low-cost carriers in the country believe that a 16 hour utilisation would require them to fly at timings, when the load factors would be minimal and the airline might not find enough people.

“Utilisation of 16 hours is fine but you need to have enough people willing to take domestic flights at 5AM and 10 PM, which is a challenge in India,” said a senior executive with SpiceJet. Another airline executive said that the plans the new carrier has shared has not taken into account the external factors at airports.

“Any efficient carrier can turnaround the aircraft at smaller airports in as low as 15 minutes but that is offset due to 30-35 minutes it takes at larger airports. There are a lot of external factors that come into play,” said a senior executive of another low-cost carrier.

Competitors say that fares 30 per cent lower is not sustainable. “How much lower can fares go? Our strategy is simple: use sales and stimulation to build loads 30, 60, 90 days before departure, and maximise yields for bookings closer to date of travel… The challenge is close-in fares are way too low by any standards. Even AirAsia does not charge just $170 for a last minute refundable booking on a two-hour flight like airlines in India do. So where will their 30 per cent lower fares going to come from,” said the SpiceJet executive.

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