Tony Fernandes, Chief Executive Officer of AirAsia, and Mittu Chandilya, CEO of AirAsia India , want to shake up the country’s domestic airline sector with a completely new model of operating an airline. In an interview with BusinessLine , they share their business plans:

Haven’t you been brave to start an airline in a market where almost all the airlines are losing money?

Fernandes: You got to be able to make a change. You can’t run away from opportunities. We believe that we can help the regulator to make changes in their policies for making it conducive for airlines to operate well. You have smart people in your Government.

Chandilya: I fundamentally believe that when things hit rock bottom, the only way to go is up. You need a lot of perseverance. We have accomplished a lot in a short time. When the FDI norms were relaxed, we got the permission in just 16 days, NOC in four months and AOP in seven and half months. We need to constantly push towards our goal. I don’t sleep at nights, don’t have weekends. I believe in this market.

You are known as someone who doesn’t have much patience with failures. If a route is not performing well, you don’t hesitate to take your aircraft off that route. So, how long will your patience last if AirAsia India fails to break even as per your stipulated period even though you have shifted the target by a few more months now?

Fernandes: As long as I am making progress, it is fine with me. The start has been outstanding. We have already started breaking even. The Bangalore-Goa route is already profitable for us. So, obviously we are doing something right.

Chandilya: I don’t have a contingency plan. Our performance is connected with us getting newer aircraft and if that gets delayed, then even the break even target gets relaxed.

Dr Subramanian Swamy claims that your airline has violated norms on FDI. Do you think at some point of time it might hurt your operations here?

Fernandes: There are two issues here. A good politician will get two sides of the view. As a politician he has to put his constituency first and whether the airline is good for the country. I have never met Dr Swamy and I would be ever willing to meet him. I find his charges really bizarre.

The Government has made the rules. So the Government should know how to interpret its own rules. How can you tell the Government that you made the rule what it was not meant for? I find this court case quite preposterous because you are trying to rule on something that they made.

You have talked about multiple hubs for India. How economical will this model be?

Chandilya: Our business model is such that it needs multiple hubs. To get the reach and coverage for India, we need multiple hubs. Our business is point to point business. So, we have to run the plane and park it back as opposed to hub and spoke. It is all about logistics at the end of the day.

If the crew stays overnight, or having a maintenance and engineering hub in just one place, it all adds up to the cost. Therefore it is more viable to have multiple hubs.

We believe Bangalore will be a significant hub as it has the potential to grow. It could even end up being our main base.

The regulator has rejected your move to charge the passengers for any baggage they bring along. Let us leave that aside for a moment. Are there any new innovations you plan to introduce?

Chandilya: Whenever the market is ready, we will bring in innovations. Baggage is in fact a non-issue. We have gone by what the regulator said in a paper last year. It talked about unbundling of fares. We have broken the fare to its bones and have given the opportunity for the customer to customise it as much as he wants. If you look at fares of other airlines, you will see rates on baggage being included in it but the customer does not see it. We will try to bring in more technology, on time performance, MRO, etc.

How are your fares priced? What model do you use to calculate your fares?

Chandilya: We do have fare buckets. It is actually all about demand and supply. We have the lowest fare of ₹990 and we allocate a certain portion of the plane for ₹990 tickets, which is a base fare. Then it goes up as the days progress. But for us it is important to keep our fares much lesser priced than the others. Therefore, at any point of time, our fares will be at least 35 per cent lower than the others.

You recently sold off your interest in a Formula1 team. Are you looking at owning an IPL team?

Fernandes: No, no. no. I got out of one mess and don’t put me into another. I am going to just watch IPL. I think there are some bloody big egos in the IPL.

I would rather focus on the egos in the airline sector.

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