AirAsia to challenge SpiceJet, Go Air over low fares and first-time flyers

Humour is the way to the millennial heart, or so the numerous behavioral surveys and advertisements for products ranging from soaps to clothes to airlines indicate. No surprise then that AirAsia, currently positioned below IndiGo, SpiceJet and Go Air in the pecking order for low-cost carriers, is looking to raise a few laughs with its new campaign targeted at young travelers from outside the metros. However, despite the targeted pitch, the challenge would be to rise above the problems plaguing all low cost carriers today, on service, timeliness and safety. 

AirAsia has recently expanded its destination list, adding many connecting flights between the South, North and East. It competes with the other low cost carriers in all these sectors and is known for its extremely aggressive pricing plan. Its efforts have yielded mixed results say experts, partly because the airline underestimated the regulatory requirements of the country and the pushback from domestic players.  

The domestic market for airlines is booming, but say experts, the airline would have to learn from the missteps in the past to realise its potential. According to CAPA, domestic traffic is expected to grow by 18-20 per cent, crossing 150 million annual passengers. At the same time, capacity growth will also be close to 25 per cent in 2018. The buoyancy in the domestic market, the CAPA report said, would make all low cost carriers, except AirAsia, profitable in FY2018. 

The airline, however is optimistic about its 2018 expedition. Its campaign, #FlyWithAirAsia is meant to increase brand recall and tap into the aspirations of the first time flyer. “Our aim is to get to become the second largest low cost carrier in the country over the course of the next 4-5 years,” says Amar Abrol, CEO and managing director, AirAsia India. In the low-cost carriers space IndiGo is the number one player, followed by Spicejet. Go Air and Air Asia. “We want to make flying synonymous to our brand. When we say courier, we say Fedex. When we say flying, we want it to mean AirAsia,” he adds. 

The airline is adding more aircraft to fuel its flight. It operates 18 aircraft at present and plans to end the year with 20-21, the target is around 60 aircraft in the next 4-5 years, says Abrol. He adds that two years ago, they had only six planes and roughly six destinations. The numbers have nearly tripled since then. While IndiGo is bringing in the ATR aircrafts, AirAsia says it is bringing in the Airbus A-320s. 

At present the airline plies 19 destinations. The metro hubs are Bengaluru, New Delhi and Kolkata and the focus has been on tier II and III cities, connecting them within themselves and to the metros. Of the total destinations, 66 per cent caters to metro-tier II connections, while 16 per cent is between metros and tier III cities.

Expanding the passenger base in small towns presents a big challenge—many are first time air travelers and are often intimidated or overly aggressive on board. The airline says it is focusing on giving them an experience that will have them come back for more. “We are taking the brand into cities, where not only are people experiencing AirAsia for the first time, there’s a sizeable number which is experiencing flying for the first time when they board our planes,” Abrol said. 

To drive its message home, AirAsia has also launched a big effort on social media and digital platforms. Its new advertisements pitching the airline as comfortable and quick travel on a shoestring budget are on YouTube, TV and the movie theatres. Around 30-35 per cent of the total ad spend is on digital, the company said. Its target audience is between the age group of 18-20, all the way to 40-45. They are big users of social media and other app-based digital platforms. “We will spend the right amount with the right mix, whether it’s traditional, digital or on site activation. It’s going to be a mix. But certainly the number will continue to increase as the company grows,” Abrol said. 

The airline is not just looking to create greater awareness for its Indian operations but also for its associate airlines AirAsia Malaysia, AirAsia Thailand, AirAsia X. They have also increased their presence in India. AirAsia Malaysia, for example, now has flights from Bhubaneshwar and AirAsia X is flying into Jaipur. The young are keen and adventurous travelers and flying abroad is no longer as prohibitive as it used to be. “We’re talking about 18-20 year olds who love to express themselves and their individuality,” Abrol adds.

According to CAPA, as of March 31, 2018, there are 125 million domestic airline passengers and 65 million international ones. The low-cost carrier market share is likely to reach 70 per cent or higher. Abrol says that the industry is growing at double digits for the last 8-10 years and the load factor has always been upwards of 80-85 per cent. AirAsia will fly to about 20-21 cities by the end of the year and the focus will be to increase the frequency of flights between the cities.

Business Standard is now on Telegram.
For insightful reports and views on business, markets, politics and other issues, subscribe to our official Telegram channel