AirAsia Wins DGCA Operating Permit, Opens Up Competition

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AirAsia Wins DGCA Operating Permit, Opens Up Competition

AirAsia, the biggest low-cost carrier in the region won a license to operate its Indian venture as rivalry intensifies in one of the fastest expanding air-travel markets in the world.

The airline’s Chief Executive Officer Tony Fernandes announced AirAsia had received the license via his Twitter account.

The acquisition of the operating permit had been delayed for more than a year after AirAsia was allowed in March 2013 to form a partnership that involves India’s Tata Group, highlighting worries that red tape was causing delays that undermined the country’s economic growth.

AirAsia had planned to commence flights in the South Asian market by December 2013 and offer some tickets for free, Bloomberg reported.

“Competition is going to intensify now. We need to see what their plans are and what kind of routes they choose over the next couple of years. It’s a new airline, so they will try to offer lucrative fares,” air-travel analyst Rashesh Shah of ICICI Securities said.

Shah added that AirAsia’s entry was likely to trigger a price war.

The airline will have the southern city of Chennai as its capital. The budget carrier will operate Airbus A320 plane to smaller cities for the most part.

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Fernandes said he was targeting passengers from the 1 million persons who commuted by train every day in India.

AirAsia and Singapore Airlines Ltd are both in partnership with Tata Group of India for separate businesses while Etihad Airways PJSC of Abu Dhabi has acquired stake in Jet Airways (India) Ltd.

An organization in India’s airline industry and a politician belonging to the main opposition party, which is poised to form the country’s next government after a general election concluding in May, were against the idea of licensing AirAsia to operate there, according to Reuters.

The carrier’s stock jumped 1.8% in Kuala Lumpur on Wednesday after the news was announced.

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To contact the reporter of this story; Yashu Gola at yashu@forexminute.com