AirAsia debuts in India amid price war
It sets a target for its India venture to break even in just four months
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[NEW DELHI] Asia's biggest budget carrier has set a target for its India venture to break even in four months. Some of its local rivals haven't achieved that in three years.
The India venture of AirAsia Bhd started operations yesterday as airlines in the world's second-most populous nation offer base fares lower than two US cents to woo 61 million domestic fliers. Jet Airways (India) Ltd and SpiceJet Ltd have posted annual losses, while Kingfisher Airlines Ltd, saddled with US$1.4 billion of debt, has been grounded since 2012.
AirAsia's entry heightens competition in India, where over the last seven years, airlines are estimated to have lost US$22 every time a passenger has stepped on board. That's added up to a US$10 billion loss in a market where the number of domestic travellers is forecast to triple in the decade to 159 million by 2021. The challenge is how to make money while fares continue to drop even as costs increase.
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