AirAsia India Launches First Flight, Fare War Set To Intensify

June 13--MUMBAI -- The first flight of AirAsia India took off from Bangalore airport for Goa on Thursday, as the launch of India's fourth low-fare airline signalled increased competition.

AirAsia Bhd, Asia's biggest budget airline, has set a tough target for its India venture, AirAsia (India) Pvt. Ltd, to break even in four months and start flights in northern India within six months.

Mittu Chandilya, chief executive officer of AirAsia India, said his vision for the country is "to change the way people travel in India", and to make AirAsia India "the biggest airline" in the country ultimately. "We are trying every day to reduce the fares," Chandilya said, adding he expects his airline to break even in four months of operations.

AirAsia currently offers two routes, Bangalore to Chennai and Bangalore to Goa. To celebrate the announcement of its inaugural routes, AirAsia India had offered 25,000 promotional seats at Rs.5 plus taxes.

To take on AirAsia India, country's largest low-fare airline IndiGo, run by InterGlobe Aviation Ltd, had launched promotional fares for just Rs.1 on AirAsia routes. Another budget airline SpiceJet Ltd had launched similar promotional fares. AirAsia India is a venture of Malaysia's AirAsia, Tata Sons Ltd and Arun Bhatia of Telestra Tradeplace Pvt. Ltd.

"AirAsia India's entry will only make the losses of the other Indian airlines worse than they are," said Bharat Mahadevan, an independent consultant. "Indian aviation will continue to bleed more than ever... and passengers will enjoy the low air fares that they enjoyed three years ago."

He said AirAsia is unlikely to break even in four months.

The increased competition will increase financial challenges for all operators and place great pressure on struggling incumbent carriers, consultancy firm Centre for Asia Pacific Aviation said in a May report. It said the industry is expected to report a full-year loss of approximately $1.5 billion.

Copyright 2014 - Mint, New Delhi