The ongoing uncertainty regarding whether the government will scrap the ‘5/20 rule’, which stipulates Indian carriers to have minimum 20 aircraft fleet and five years of operations to be able to fly international, has affected the growth plans of low-cost carrier AirAsia India.
In an interaction with CNBC-TV18’s Kritika Saxena, CEO Mittu Chandilya discussed the company’s strategy as well as whether it will start operations from Mumbai.
Reports say the government could replace the 5/20 rule with a “domestic flying credit” in which carriers will earn points if they fly to remote locations within the country -- points that would enable them to fly internationally.
Excerpts from the conversation.
Q: You have launched operations from Delhi. What is the growth plan from hereon?
A: Delhi apart from anything is a special launch for us because it is our second hub. So we are actually parking planes overnight there and the whole idea is now, we have a hub in the north. So from Delhi, you will start seeing a lot of planes coming, going into Tier-II cities. We are primarily focused on the Tier-II cities from Delhi and Bangalore. We continue to keep expanding.
Our growth is going to be predicated upon the number of aircraft we bring in, the routes that we open up. I am still hoping on international, I am still hoping that the 5/20 rule -- or what I call the 3/20 rule now changes -- and the points system comes down or be abolished in its entirety.
Q: Has the lack of clarity on these deterred your expansion plans in any way whatsoever?
A: It has not deterred it but honestly we did take a little bit of a watch-and-wait approach. We slowed down our growth plans because there was a lot of uncertainty going on. I would hate to open a [domestic] route only to say okay, now internationals come.
It was a wrong move to open up routes rapidly when there is so much uncertainty and you had also other airlines, which were going through some expanding, some contracting. So we felt, look, let’s just watch and wait, let’s see when the dust settles down and then see what is the best way to kind of go.
Q: So Delhi now, is Mumbai next possibly?
A: Everybody asks me about Mumbai, I love this city, there is a lot of opportunity, the yields will be brilliant here. [But] I am not confident of the infrastructure particularly the congestion of when the planes come in [and leave].
With our model with a clear 25 minute turnaround time [between a plane arriving and then departing], I can’t risk a delay of even 10 minutes. So, I don’t think Mumbai is on the plans yet, I haven’t decided on it. It will be hopefully. We will look at that maybe six-eight months down the line.
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