AirAsia plans to explore Indian aviation space

Weeks after the civil aviation ministry said it was considering allowing foreign airlines to pick-up minority stakes in domestic carriers, AirAsia, Southeast Asia's biggest low-cost airline has indicated it is open to exploring such opportunities in India.

However, Tony Fernandes, the chief executive officer of AirAsia, a Malaysian budget carrier that operates international flights out of nine Indian cities, said improving airport infrastructure would be vital for attracting foreign players into the sector.

"Without a doubt," said Fernandes, when asked whether he would be interested in acquiring a stake in an Indian carrier, "But you need better airport infrastructure for us to come in." "It's crazy that it (aviation sector) isn't open already. Indian banks are open, Indian mobile phone (sector) is open, roads are operated by other people, airports are owned, so why not airlines?" he said.
AirAsia currently operates 104 aircraft worldwide, and has cash reserves of about $ 1.5 billion.

Earlier this month, Civil Aviation Secretary Nasim Zaidi said the civil aviation ministry had received a request from the Department of Industrial Policy and Promotion (DIPP) to allow foreign airlines to invest in India. The proposal, he said, was under consideration and a decision would be taken shortly.

But the country's airports is the only cause of frustration, said Fernandes, although AirAsia was keen on investing in India. "It's like talking to the land of the living dead. The trouble is growth is so good in India that no one wants to do anything about it. But it will impact (the sector)"

The opportunities in India, though, Fernandes admitted, were substantial. "India to me is a continent and is a massive opportunity. Everyone is fixated with Mumbai and Delhi, but I like secondary cities such as Kochi, Trivandrum, Amritsar and Pune. There are airports everywhere" he said.

Moreover, India's outbound performance has been very encouraging. "The response has been very strong. Over 60 per cent of passengers on our flights out of Delhi and Mumbai are Indians. In comparison, when we started in Korea and Japan, only 25-30 per cent for passengers were nationals of those countries," said Azran Osman Rani, CEO of AirAsia X, the long-haul arm of AirAsia.

The coming of Indian low-cost carriers such as Indigo, which is expected to commence services later this year, into Southeast Asia is an opportunity that will drive more numbers of tourists into the region, AirAsia chief Fernandes said.

Rather than perceiving such developments as a threat, he said more flights would translate into more passengers who could subsequently move to the AirAsia network for other destinations.

"I welcome Indigo into our part of the world. I think it's good and there's such a market in Asia, the more people that promote, the better it is for us," Fernandes said.