Tuesday, August 12, 2014

More thoughts on rivalry between IndiGo and Air Asia India

Last week I wrote how IndiGo is going all out to take on Air Asia India. Yes it is right, that competition has to be contained at early stages and some bit of sentimental expansion like announcing a Bengaluru – Chandigarh but tagging along Srinagar to make it more successful makes a lot of sense.

Over the weekend, I thought more on this, and some interesting facts came up. When Air Asia India launches its second rotation, it would do 16 flights a day with its 2 aircraft and would deploy 2880 seats in the market, while IndiGo with its roughly 516 daily flights, deploys 92880 seats. So 2 bad flights for Air Asia means 12.5% of their capacity for the day is sold on lower yields or that’s not sold as per expectation, while for IndiGo – it means just 0.38% !!

What next – Will Air Asia start the battle and mount a second daily to Chandigarh? And if that is followed by IndiGo? Too bad, it would still mean, not more than 1% of capacity of IndiGo, while it could mean a lot more for Air Asia India.

As the biggest player it makes sense for IndiGo to go after the newbies who are in with the same model as theirs and a more established brand in the region owing to their presence in multiple locations.

Air Asia India, has not done their homework well. I remember reading a supplement of Business Standard in 2006, and I think that was the first supplement which used to cover aviation exclusively. If I remember correctly, Nusli Wadia was quoted as saying “If we fill up the planes, it is at lower costs, and if we increase the fare, there are no passengers”. I will not really quote him here, because I don’t remember the exact words, but the meaning was this and that continues in Indian skies, even today.

Announcing sale as a measure of increasing revenue is a good way abroad, but not in India, because it hardly simulates the market, it only ensures that the person who was supposed to fly, books early. No extra bums on the seats. What more, the airline announcing the sale, thinks that they can fill up seats last minute at very high costs, but some other airline announces the sale for the same period, and you are forced to match it.

Thinking from a Network Planners perspective, I keep thinking if IndiGo will launch a new station to take on Air Asia, or will it launch frequencies to guard its own fort? Will Air Asia be better off launching flights to Mangalore, Calicut, Madurai, Trichy from Bengaluru where I presume that chances of IndiGo following them are marginal or does Air Asia think that there is no market at these places because IndiGo does not operate at these stations!

I am told there are some interesting routes coming up for AirAsia, and most of them are routes where IndiGo already operates non-stop flights. It’s a lost battle for Air Asia India, if they are going to keep chasing IndiGo. Why am I complaining? It’s eventually for the better of consumers! Yes, I am complaining because the industry will not sustain and because I am in Pune and not benefitting out of this J

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