Low-cost carrier AirAsia plans to increase its India fleet strength to 14 aircraft by October, four more than the current 10, Amar Abrol, AirAsia India CEO, said. This number will, Abrol added, rise to 20 by October 2018, allowing the airline to then begin international operations.
Aviation industry rules in India require an airline to operate a minimum of 20 aircraft on domestic routes before it can deploy any further aircraft to international operations.
Last month at the Paris Air Show, holding company AirAsia signed an agreement with aircraft manufacturer to order 14 new A320ceo aircraft, its current aircraft of choice. However, this precludes the airline from reaping the benefits under the government’s UDAN regional connectivity scheme, which is more suited to the smaller ATR aircraft.
AirAsia India, a 49:51 joint venture with the Malaysian parent and the Tata group, reported revenue of Rs 1,000 crore for FY17, the company said. Abrol said the airline is on track to turn profitable by December 2019. The two shareholders have invested more than $75 million in the India venture till date.
On Tuesday, the airline announced that it had added Bhubaneshwar to its list of destinations, raising the count to 16. it also added six new routes connecting New Delhi, Jaipur & Bagdogra to Kolkata. The airline, based in Bengaluru, also has hubs in New Delhi and Kolkata.
“Our focus is not only on increasing routes but on increasing frequency and gaining market share in the routes we operate in,” Abrol said, explaining its modest fleet strength growth plans as opposed to market leader Indigo which is a lot more aggressive on fleet growth. “We’re currently gross profit-profitable in about 60 per cent of our 78 routes.”
Abrol also added that in the next couple of weeks, the airline will introduce its FLY-THRU programme to its operations in India. The ancillary service, available for a convenience fee, allows fliers to transfer from one (international) flight to another on the network without the hassle of going through immigration processing, or of having to collect baggage when taking 2 different flights to get to the final destination and stopping over at a transit station.
Abrol also said that the industry has made a representation to the aviation and finance ministries to reconsider rates under the new Goods and Services Tax regime on aircraft purchases by airlines. Tax credits are not available on imports and the new tax rules levy a 5 per cent customs import duty on aircraft, which raises the cost of each aircraft by roughly Rs 8 crore for the airline.