For over an hour, AirAsia’s Tony Fernandes patiently answered a whole gamut of media queries this morning in Delhi, his last stop in the India tour which saw him meeting many government functionaries to speed up clearances to his airline venture.
The airline may yet start by October, if all clearances are in. Here’s a snapshot of what all he was candid about and where he deftly used charm and some ingenuity to side step questions:
On Subramanian Swamy’s opposition to AirAsia
The airline industry in India is incredibly self interested. Rules like 5 years of mandatory domestic operations before flying abroad – we all know which airline pushed for this. Lots of vested interests working in the industry. On one hand, you allow 100% FDI in telecom and on the other, you are getting into commas? (Reference to Civil Aviation Minister AJit SIngh averring he knows his English when there was controversy over whether an existing airline only can be allowed FDI. Eventually, the Government said FDI is allowed in existing airlines as also those that are yet not born). India has lost many years because of vested interests. I know there are a lot of people who don’t like us and some who won’t like us.
The drama surrounding Jet-Etihad deal
This is an amazing opportunity for airlines (perhaps indicating Air India). I hate flying through big international hubs. Lot of opportunity for airlines to begin direct, non-stop services. Airlines should stop being negative.
Federation of Indian Airlines threatening to move court if permission is granted to AirAsia
Let the regulator deal with that.
Whether AirAsia will snatch market share from existing LCCs
This is not a zero sum game. We are not here to take anyone’s market share. We are here to expand the overall market.
Any interest in acquiring Air India, along with the Tatas who were keen on it in earlier years
No interest in taking over AI. But it should not be in government hands. It should be run as a private enterprise.
What wrong did Air Deccan do that AirAsia has learnt from
Two things: AirDeccan flew two types of aircraft while we will only use Airbus 320. It offered low fares but did not have the balance sheet to compete with people who had lots of money…now all the money that had to go out of aviation is gone. Now’s the time to enter this market. We will convince the government on necessity of low-cost airports and how flying should be for everyone. In Malaysia, every cab driver flies but all the taxi guys who ferried me around in India, no one has flown. We need to make flying affordable to these people.
So will you offer one rupee fares like Air Deccan did?
We will offer free tickets, one rupee tickets, cheap tickets. Our bookings start almost one year in advance. We will offer online booking, booking through agents. For people who don’t have a credit card, we will tie up with things like Tata’s Chroma stores where payment can be made for tickets.
What is the philosophy behind free tickets?
First, a free ticket is almost never a return ticket. So the guy who gets to travel free one way will have to buy a ticket for his return. We offer some free tickets so that seats which would otherwise remain empty get filled at marginal cost. This passenger can then perhaps be persuaded to buy some food on the aircraft, maybe book a hotel though our partner Expedia, take our insurance product. So we are maximising revenue this way. It is the combination of maximising revenue and reigning in costs which helps us offer lowest fares.
How will costs be controlled when ATF prices in India are among the highest?
When I began this airline, ATF was at $30, now its $130 and more. We began in Malaysia by competing with a state subsidised airline but today, that airline does not need government subsidy and we are also making money. So relentless focus on costs and offering lowest possible fares in the key.
Investment in India and manpower estimates
We will initially invest $30 million here and will start operations with 200 people. We have already hired 60 pilots and cabin crew. Requests are coming from pilots of IndiGo, SpiceJet etc – we will hire experienced pilots but for cabin crew and co-pilots we prefer freshers. This gives young guys a chance.
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