AirAsia may miss its December launch target

AirAsia may have to defer the launch of its domestic operations to early 2014 as the process for the issue of an operating permit can take upto three months. The airline which is targeting a December launch is still to secure a no objection clearance from the civil aviation ministry. Once it receives this clearance the airline will have to make an application for an operating permit.

Last month the Directorate General of Civil Aviation issued the air operator certification manual which stipulates the application for a permit must be submitted atleast 90 days before the date of intended revenue operation. Separately,  the regulator has drawn up a time line of tasks to be completed  within the 90 days and that includes document evaluation, inspection and five review meetings with the applicant. The 90 day period is an indicative time limit and the actual process can take place quicker or can stretch longer than three months in case of non completion of formalities. AirAsia will have to file a schedule with the DGCA to start services once it receives the permit.

November-December is a peak season for travel as it coincides with Diwali and Christmas holidays.  Passenger loads in the two months are strong and  allows airlines to charge higher fares. Thus ideally AirAsia would like to start its service in December as passenger drops in February-March. AirAsia will have to file a schedule to start services  once it receives the permit.

Asked about the launch,  an Air Asia spokesperson said the  "launch date purely depends on when we get government permissions.''  Director General of Civil Aviation Arun Mishra said  "The airline chief executive officer Mittu Chandilya met me two days ago to discuss the airline's plans. Their team is working on the  documentation. We have not received a formal application for the permit. Once the NOC is received they will start working with our team. The permit can be issued in a month if all  requirements are in place.''

AirAsia did not respond to queries related to its marketing and strategy. However in an earlier interaction with this newspaper,  CEO Mittu Chandilya said " On-time and service will be hygiene factors.  Passengers should expect to get more than what they are used to now.  Pricing and connectivity will be key differentiators.  We want to bring fares down by 25-30%.''  The airline is targeting first time flyers and according to a media report the airline's chief commercial officer Amisha Sethi has been visiting railway stations and bus stands to understand passenger behaviour.

Aviation industry experts say the airline needs to do more than just offering low fares if it has to compete against the likes of IndiGo or SpiceJet. AirAsia has said it will focus on South India and not fly the Mumbai-Delhi route but critics say there aren't many untapped routes from Chennai. At present Madurai has no air connectivity with Bangalore  but nine daily flights to Chennai.

 "Kozhikode and Mangalore are under served from Chennai but there is not enough demand on these routes. There are cities in Gujarat and Madhya Pradesh which  have a seasonal demand from Chennai.  Again there is a difference between AirAsia and AirDeccan. When Deccan started operations it was the only one offering cheap fares. But this strategy of offering low fares is being used by every one now,'' said an executive of a  rival private airline.

"There has to be a reason why I as an IndiGo customer would want to travel on AirAsia. Perhaps I will fly to feel the experience or see the nice aircraft but I will need some thing more tangible to hook me. That could be add on frills in a package, pricing or loyalty programme,'' said Gaurav Sundaram, country head, Egencia, the business travel arm of Expedia. Sundaram draws a parallel with retailers who keep the prices low but attract customers with loyalty programmes, credit cards and cash back offers.

"Tony Fernandes (AirAsia group CEO)  must have mapped out a strategy. I feel the airline is going to come up with some thing which changes the paradigm and makes people feel that they want to fly AirAsia whether it is cheaper by Rs 100 or Rs 500. Just to fly for the experience,'' he added.