Friday, June 20, 2014

AirAsia India Updates

This post shares some of my observations and updates on Air Asia India.

DGCA forces Air Asia to offer 15kg free baggage
When I was booking my MAA-BLR flight earlier this month, I was asked to pay Rs 199 for 15kg check in baggage. I decided to skip it, as I will be having only a cabin bag. Looks like DGCA has poked its nose in unnecessary matters and has forced Air Asia to offer free 15kg check in baggage. At first look it might appear as if DGCA has made good favor to flying public, but this move is obviously counter-productive. Airline will simply increase its fare by corresponding amount and even those who don’t have any check in baggage will now have to pay extra. I fully agree with this ET article- being able to break down cost elements is very fundamental to low cost carrier. DGCA forcing its way in will force airline to recover that money elsewhere. Let the flying public decide which service is worth what. If there’s no demand, airline will naturally adapt/adjust its rules/fares.

Chennai-Blr service started, Blr-Kochi announced
2 weeks after initial Bangalore-Goa flight, Air Asia has commenced Bangalore-Chennai service, twice a day. 830 Rs return fare is all sold out (I grabbed one), now minimum fare is Rs 990 one way (only few seats left on select dates) and normal/standard fare seems to be stable at Rs 1699, one way. Spicejet and Indigo have matched this fare by offering Chennai-Blr for less than Rs 2000, one way.
Blr-Cochin promo rates of Rs 500 are all sold out within 36 hours. Next best rate is now Rs 1699 one way.

No multi-leg bookings
Airasia doesn’t allow multi leg bookings. For example I can’t book Goa-Chennai (via Blr) or Chennai-Cochin (via Blr), though it is same aircraft. When asked, Airasia facebook page replied that “We are a point to point carrier and don’t have a transit facility yet”. But for the routes I’ve called above, no transit facility is required- just allow the customer to stay seated in the aircraft and ensure that his/her baggage is not offloaded in Blr.

Booking 2 separate ticket is not viable. When they have this record 20 min turnaround time, I can’t go out and check in again. No time.

With some tweaks in their booking system they can facilitate multi leg bookings- if they wish to offer it. (They do it currently for Cochin-Australia). One possible reason not to offer multi leg booking is to avoid liabilities such as having to arrange alternate flight if customer misses the connecting flight.

Aircraft Utilization
Air Asia India’s current schedule, with single aircraft:
·         First flight of the day is at 5.55AM from Blr to Chennai, reach by 6.55 AM
·         Then same aircraft returns at 7.30 AM, reach Blr by 8.30
·         Leave for Cochin at 8.55AM, reach by 9.55 AM, return at 10.20, reach Blr by 11.20AM
·         Blr-Goa: Depart by 3.10PM, reach Goa by 4.25PM
·         Goa-Bangalore-depart 4.55 PM, arrive 6.05PM
·         Evening another trip to Chennai- 6.35PM to Chennai, reach by 7.35PM and return from Chennai by 8.10PM to reach Blr by 9.10 PM, call it a day.

This adds up to 8.5 hours of flying time per day so far, half of AirAsia's target of 16 hours. To reach their target, they need to introduce minimum 2 more flights for the same aircraft- one between 11.50 AM to 2.40PM and may be one more late night flight between 9.45PM and midnight.

2 more short haul flights take total flying time to about 12.5 hours, still short of 16 hour target (I am assuming ground time is not counted in this target). Another short flight or converting one of the other trips to long journey could do the trick. But then, such a packed schedule without any buffer is bound to cause problems. However efficient an airline may be, there’re lot of things not in control of the airline. Airport delays, congestion, weather, technical problems etc can wreak havoc in the schedule and can result in severely disappointed customers, who may not always be ready to compromise with reliability in exchange for some savings. An hour’s delay during first flight of the day can disturb rest of the day’s schedule. Good that Airasia is not flying to Delhi- their turnaround time target of 20mins will go for a toss there, since taxing time itself is that much! (Air Deccan had same problems –suffering loss of reliability while trying to cut costs). Maintenance crew also will have to work overtime as plane will be grounded for just a few hours in the night.

What would be Air Asia’s next destination?
Pune, Mangalore or Hyderabad seem like possible destinations. All of these are short haul from Bangalore and can be covered in less than 1 hour. Let us wait and see.

Mangalore has cheaper ATF [source: ], so maybe they should go there couple of times a day and fuel up to the max!

Once they add the second aircraft, more opportunities would open up.

What would be Air Asia’s next destination?
If they continue to use their only aircraft, then only 2 slots are available to fit in another flight- between 11 AM and 3Pm and probably another trip between 9.45PM to 12.30AM.  Pune, Mangalore or Hyderabad seem like possible destinations

No Complaints so far
As of now there has been no report of customer complaints. Hope it stays that way. But once they add more flights the real test will begin.

Rivals are matching Air Asia fares
Before Air Asia Blr-Kochi flights were announced, a round trip fare in other budget airlines was about 6k, if you book about 1 month in advance, Rs 8k+ for last minute trip. Now all budget airlines have matched AirAsia's standard fare by bringing round trip fare to 3-4 k approx. (Even cheaper if you're lucky)

Chennai-Cochin fares still hover at around Rs 6k. Why can't rival airlines reduce airfares before Air Asia announces  a Chennai-Cochin flight? This will help them gain lots of goodwill, than being seen as a desperate measure to retain customers after AirAsia announces a lower fare.

Let us take a look at other alternatives to commute between Karnataka’s Capital and Kochi in Kerala
Bengaluru-Cochin by Bus: KSRTC’s Ac sleeper, Airavata Volvo costs about Rs 1100, takes 10 hours approx..
Bangalore-Ernakulam by train needs a travel time of 11-13 hours approx. Sleeper Rs 330, 3rd AC train fare is Rs 855, , Rs 1210 in 2nd AC (excluding Tatkal and any applicable concession, +/-5% depending on exact train). Travel to railway station will be much cheaper, compared to traveling to airport. So do factor this cost while comparing fares.

Flight time is about 1 hour between Cochin and Blr. Add 1 hour airport travel time, 120 mins check-in and other airport formalities, you’re looking at about 4 hours, which is close to one third the travel time in Bus/Train, for another 2-3k more.

Situation is similar between Blr and Goa, only for Chennai-Blr, road/train still could have some advantages.

With large number of Malayalee people working in Blr and Chennai, all trains to Ernakulam get booked within few hours. I am not talking about Tatkal tickets- I am referring to general tickets which open 2 months ahead of travel date. If today is June 16, tickets for Aug 15th are already in Waitlist/regret. So budget flight is guaranteed to have huge patronage.

Also note that Air asia offers ultra cheap fares to Australia from Cochin- about 15-17k best price one way.
Waiting to see how many of Air Asia’s 10 planes planned for first year will be based out of Chennai (if at all any). I read here that AirAsia is betting big discounts from BIAL to keep Blr as its base. [details]


Andy said...

Hi there,

Very interesting observations - you're right dead right, forcing airlines to cater to 15KG luggage is definitely a publicly-popular move, but low-cost airlines rely on the fact that they can charge for these services to keep base fares low.

Regarding the initial pricing, I'd suggest that AirAsia started off with such low fares to establish a low fare 'baseline' and gauge interest in services (i.e. what are people willing to pay).

Lastly, I know it might not sound good, but I'm delighted that the indigenous carriers IndiGo/SpiceJet are matching fares...I'd hate to think they'd lose out having been established and providing a good service for years already.


Shrinidhi Hande said...

Thanks Andy