Get set for more price wars in the domestic civil aviation market. Air Asia looks at the pricing of its tickets as the most important key differentiator between it and the existing airlines in the Indian market, low-cost airline promoter Tony Fernandes said on Thursday.

“The purchase price will be the number 1 differentiator (from other airlines). Besides, the strong brand image and the wide network will also make a difference,’’ Fernandes told newspersons in a telephonic interaction.

Fernandes, however, declined to get into specifics of his latest ventures pricing policy.

The interaction was conducted a day after news broke that AirAsia had teamed up with Tata Sons and Arun Bhatia to set up a domestic airline.

Indian airline

Fernandes said that the new airline will be an Indian airline with Indians having a majority representation on the board. “We hope to be able to announce the Chief Executive Officer in the next two-to-three weeks,’’ he said.

Asked whether AirAsia’s entry will lead to the demise of some existing airlines, Fernandes shot back by saying: “businesses put themselves out of business and it is not competition which puts them out. If an airline is rightly capitalised, follows the right business model and the right people are running it, there should be no problem.’’

Foreign investments

He was of the opinion that this is a “renaissance period’’ with the Indian Government keen to attract investment in the domestic airline sector.

The new airline is likely to be called AirAsia, Fernandes indicated, pointing out that though the Tatas had a tie-up with Starbuck, the new venture did not carry the Indian company’s name.

On the issue of whether he was aware of the Ministry of Civil Aviation being “`upset’’ at not being informed about the airline’s plans, Fernandes said: “We have gone in with our eyes open. We are comfortable with our approach.’’

AirAsia operations

AirAsia plans to begin operations in India probably in the fourth quarter with three-to-four Airbus A-320 aircraft and an initial investment of $30-50 million.

“Initially we will have a staff strength of about 300 people. But as we grow we will add to the number. As a thumb rule generally 20 people are employed with every new aircraft added to the fleet,’’ he said.

(This article was published on February 21, 2013)
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