AirAsia to focus on managing costs structure

If you cannot make an airline work with 1.2 billion people, there is something really wrong says Tony Fernandes

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Tony Fernandes, the CEO of Malaysian low-cost airline AirAsia, has faulted poor cost management for India's aviation industry failures and said it's something his airline would get right.

AirAsia, in a tie-up with the Tatas and Telestra Tradeplace, is getting ready to launch its Indian operations. "We hope to start this year," said Fernandes, addressing mediapersons in Chennai on Saturday. It is awaiting the no-objection certificate as well as the air operator's certificate as per an ET report.

AirAsia, which has made the low-cost model a success in South East Asia, is coming to India at a time when the industry here has been incurring heavy losses. "If you cannot make an airline work with 1.2 billion people, there is something really wrong," he said.

"The key thing that failed in the Indian airline industry is cost management," said Fernandes. "Fundamentally, I think there has not been a low-cost carrier in India. The closest was Air Deccan. Unfortunately, it had the right fares but the wrong cost structure. So it was unsustainable."

He conceded that the high cost and taxes pertaining to aviation turbine fuel would be a sore point. (India has one of the highest tax rates globally for aviation fuel). He said, "" Can the model work with aviation tax fuel, yes. But it will not be as big as without it.""

The key, he said, is to have low fares everyday. "We were the lowest cost airline when we started 11 years ago and we are still the lowest cost airline. It is our religion and in our DNA."

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