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VT_ATF_Approach_BIAL_11th_June_2014

AirAsia India announced its plans to operate to the north, connecting Bangalore with Chandigarh and Jaipur effective September 5th, 2014. The new routes, and an additional frequency on the Goa-Bangalore vv sector will be supported with a fleet of two aircraft.

The second aircraft for AirAsia India is expected to be delivered in the month of August. The plan to fly to the north with the arrival of the second aircraft is in line with Mittu Chandilya’s-CEO AirAsia India-statements on June 12th when AirAsia India started its commercial operations.

Playing on Costa’s Turf

Air Costa, the Vijayawada based regional airline poised to ‘soon’ fly pan India, plays the game of Tier I – Tier II / Tier III connectivity. The airline does not yet fly intra Tier II or Tier III city routes, and does not yet serve Tier III cities.

AirAsia India plays the Air Costa game: The only Tier I city it flies to, out of Bangalore, is Chennai. The other cities on its schedule effective September 5th – Chandigarh, Jaipur, Kochi, Goa- are all Tier II.

With just its second aircraft, AirAsia India will start flying to the north, and tap a fairly neglected route – Bangalore-Jaipur, and open a virgin route- Bangalore-Chandigarh. Bangalore-Chandigarh was on the cards of Air Costa, but the startup regional airline has had to grapple with too many domestic issues to lend it the speed to expand. The only route flown by Air Costa, not served by others, is the Hyderabad-Jaipur non-stop.

But then Air Costa does something that AirAsia doesn’t believe in: it flies three way routes: one variant of a point-to-point network strategy. For example, Air Costa flies Bangalore-Jaipur-Hyderabad: not an immediate return. According to Mittu, “point-to-point means you start from one place, you go to one, and you come back and park the plane. We don’t do three way exotic routes and none of that.”

 AirAsia is appearing less of a threat to IndiGo and more to Air Costa, though the two new players have two different aircraft, which makes a direct competition and comparison impossible.

If AirAsia India has well researched its potential Bangalore-Chandigarh traffic, then the airline will stand to reap the benefits of route monopoly. If however the airline doesn’t really fetch the traffic it needs, it would have stimulated the market, allowing Air Costa to then jump in and reap the benefits with a smaller airplane that will cater to a lower demand.

But if the market proves to be really strong, it will attract IndiGo and Air Costa on this virgin route.

On the Jaipur sector, the only other airlines to offer a direct service are Air Costa and Indigo. AirAsia’s departure to Jaipur is timed 35 minutes before Air Costa’s, and leaves Jaipur at 12:45hrs to return to Banaglore. Air Costa however doesn’t fly the return, allowing AirAsia India to tap a noon slot. Air Costa and IndiGo fly Jaipur-Bangalore only in the evening and later evening, respectively.

In essence, AirAsia India has placed itself between Indigo and Air Costa, being a true competitor to neither airline, while easily competing in some form and fashion with either airline on a per route basis.

Not SpiceJet’s cup of ‘tea, coffee, or me’

SpiceJet doesn’t offer any flights from Bangalore to Jaipur, or the return. The only possible all-SpiceJet route, not offered by the airline, is a two stop hop via Hyderabad and Delhi, which is least attractive. This is the fallout of poor frequency, even on the mainlines, effectively negating the network spread achieved by the airline’s dual fleet of Q400s and 737NGs.

On the Chandigarh front, SpiceJet’s least-total duration connection via Delhi makes the journey 5:10hr long, just 15 minutes longer than IndiGo’s connection via Delhi. The direct flight offered by AirAsia is just 2:55hr long.

Increased aircraft Utilization over longer sectors.

aai_pattern_2

AirAsia India, with its single aircraft, will fly a pattern effective 14th August 2014 that will see 10 flights of an average block time of 1 hour each pick up a total of 10:15hours over 10 flights, with a utilisation efficiency of 69%. The utilisation can touch 12:35 hrs if the airline flies two 1:10hr sectors in the 3:50hr period the aircarft stay’s on ground at Bangalore, as analyzed in this piece.

A second pattern effective September 5th 2014, when the second aircraft joins the fleet, will comprise of six flights, each with an average flight time of 2:14hrs, resulting in an aircraft utilization of 13:25hrs, with a utilization efficiency of 85%. The higher efficiency is due to the longer flights of Bangalore-Jaipur and return, and Bangalore-Chandigarh and return.

The airline hopes to, and will be able to, manage a 25 minute turnaround at Jaipur and Chandigarh. However, the 25 minutes planned at Bangalore in the first pattern seems surprising, as analyzed previously.

Based on the pattern timings, the second aircraft is likely to arrive towards end August. The airline plans to receive one airplane a month thereafter.

Apparently, Mittu said during yesterday’s Chennai press conference that the airline will induct as many airplanes as required to serve as many routes as possible till there are no route combinations left to fly.

Strong local and P2P focus

If anyone should be happy, it must be Subramanian Swamy. AirAsia’s network will open up routes that will benefit the economy, while as of today, not truly stepping on the toes of another airline. Today, there seems to be no efforts taken by AirAsia India to plan its network so as to feed traffic into its sister subsidiaries of AirAisa Malaysia or Thai AirAsia.

With routes that fly direct from one region to another, AirAsia India also seems to have a ‘regional’ focus, and by diverting traffic this way, can help de-congest airports like Delhi, which has to handle a significant number of transit passengers today.

With the two patterns, AirAsia India will add the capacity to cater to 1 million passengers, annually. As more airplanes come in, and the network and frequency grow, this number will only rise. With an average load factor across all flights today estimated at a realistic 80-85%, the airline will contribute to 800,000-850,000 passenger movements at Bangalore, annually, based on September’s patterns. This may serve to develop Bangalore as a prominent, and possibly a preferred hub and gateway in/to South India.

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