Smaller cities key to AirAsia's aggressive flight plan for India
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Consultants say AirAsia has its plan well thought-out. "They are going to be entering with a low investment, not taking the baggage of any debt or existing brand name and they are targeting an untapped marketl; it's a brilliant model," said a consultant at a global audit and consultancy firm on condition of anonymity as the person is involved in negotiations for other airlines. "It is the best way to enter this market."
However, Aviation consultancy firm Centre for Asia Pacific Aviation said AirAsia may have found the right partner but the market remains challenging. "The potential long-term growth opportunities in India, particularly in Asia's fourth-largest domestic market, also continue to be of interest to Fernandes. But the market remains very competitive – even after the suspension of services at Kingfisher – and unprofitable," CAPA said.
"Operating costs in India remain high compared to Southeast Asia due to high fuel taxes and high airport charges. The market fundamentals would likely need to change and/or further consolidation would likely need to occur before AirAsia pulls the trigger on a potential Indian affiliate," CAPA added.
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