What ails India's airlines? 'Bizarre' govt rules

Indicating its intentions to fly abroad very soon, proposed airline AirAsia India on Wednesday trashed the "bizarre" policy of allowing carriers to operate international flights only after five years of domestic operations.

"These are bizarre rules ... that you can't fly abroad before five years and 20 aircraft (fleet). ... That rule makes no sense. It is a negative for the Indian airlines. "I, as a one-plane airline in Malaysia, can fly to India. India is the only country which has such a rule," Air Asia Group CEO Tony Fernandes said.

Maintaining that the Indian airline industry has "not done a good job" to explain to the government the importance of aviation for the economy, he said "it is a shame that India

has lost many years. See what new airlines in the region have done. India has lost because of vested interests even though it has a lot of talent and economic activities."

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Asked to elaborate what he meant by "vested interests", Fernandes said "too many people have vested interests as they don't think what India as a country needs. There is 100 per cent FDI in telecom. Government should tell the people that aviation is good for the people."

"Most of these negativities come from within the industry and ultimately fails the people. ... It is an incredibly self -interested industry," he said.

Speaking on AirAsia India which is being backed by his carrier, the Tata Group and Telestra Tradeplace of Arun Bhatia, he said it would offer cheap tickets by charging for various services including food and preferred seats, besides taking "aggressive" cost-cutting measures.

"There is no such thing as free. There is no free food. If you want a nicer seat, pay for it. We will offer the lowest denominator cost by unbundling the fare," he said.

But AirAsia India would offer 15 kgs of free baggage allowance with each ticket, as per rules here. "(European low -cost carrier) Ryan Air charges for washrooms. We won't do that but we will give you options," he said. 

"I would not see (the fares) being too costly to drive away customers and neither too cheap not to meet the costs," the AirAsia chief said, adding that his airline model in Malaysia -- which has the tagline of 'everyone can fly'-- attracts even the "taxi and bus driver".

Asked how cheap tickets would be, Fernandes "you will know when we do our first flight. We can go low. Our fares from Kuala Lumpur to Kochi is lower than Kochi-Mumbai."

AirAsia India, which would have a fleet of Airbus A-320s, would invest $30 million to begin with, he said, adding that he was looking forward to low-cost airports across India, connecting many more routes and getting into the Maintenance, Repair and Overhaul (MRO) business in the country.

Among the steps to be taken on "aggressive cost-cutting" would be ticketing through the internet, using Tata's retail shopping chain, introducing pre-paid cards on which air tickets can be purchased, apart from travel agencies.

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His Group would also enter India's insurance market through 'Tune Money', a Malaysian financial services company that offers insurance and loyalty card products. "But this venture will be separate from the airline business."

AirAsia India CEO Mittu Chandilya, who was accompanying Fernandes, said he was bullish on India's aviation sector and it was his dream to turn AirAsia India into a bigger entity than the AirAsia Group. "There is a huge opportunity ... though I can understand the costs and other issues."

Observing that this was the "right time" to enter the Indian market, Fernandes said "silly capital has gone out. Eight years ago, I said I will never come to India as there are crazy guys in this business who had too much money to throw away. They have lost all their money now. There is a bit of sensible business now."

AirAsia top brass and its advisor Ratan Tata on Tuesday met several ministers in an effort to speed up clearances for AirAsia India which they aim to launch by October.