AirAsia's low-cost model 'won't work in India'

A SENIOR aviation industry official in India has rubbished claims that AirAsia's Indian operations can offer cheaper fares than the rest of its competitors.

The Economic Times quoted Sanjiv Kapoor, chief operating officer of low-cost Indian operator SpiceJet, as saying over the weekend that AirAsia's low-cost model would not work in the country in the face of high costs.

"There is only one way to offer fares lower by 30-35 per cent than market rates, and that is to have a 30-35 per cent lower cost structure," Mr Kapoor was quoted by the Indian newspaper as saying. "Given fuel and other costs are similar for all players in India, that kind of cost advantage can only come from lower aircraft and asset costs. You can have that kind of cost advantage if, maybe, part of your costs are reflected in Kuala Lumpur and not in India."