With Air Asia set to fly in, IndiGo urges government for level playing field

NEW DELHI: Breaking its silence over the approaching launch of AirAsia, budget carrier IndiGo said it welcomed greater competition but urged the government to ensure a level playing field for all airlines.
 Aditya Ghosh, president, IndiGo, India's biggest airline by passengers carried, said any kind of competition is good as it "keeps us on our toes". "It also helps policy and customers."
 All the same, there should be a level playing field for Indian carriers to do well, said Ghosh. "If an Indian carrier wants to fly overseas, it has to wait for five years. Indian carriers must seek permissions every summer and winter for routes. These things don't apply to a foreign carrier."
 The government permitted AirAsia, Malaysia's biggest budget carrier, to establish a passenger airline partnering the Tata Group last month. It is due to start operations later this year. The operations of IndiGo and AirAsia are strikingly similar. Both are genuine low-cost operators, with a track record of keeping their planes almost continuously in the air and their point-to-point network.
 Yet, there's a key difference that might hurt IndiGo's dominance in the Indian skies. AirAsia is renowned for its cut-price fares, whereas IndiGo's fares have been anything but low in recent months: it charges more than even a full-service airlines such as Jet AirwaysBSE 2.77 % on many routes.
 But Ghosh said his airline's fares were market-driven. "With each carrier having to manage its own yields, diverse cost structures and different focus, some prefer profitability, others market share. The charges tend to be different."
 IndiGo's price model is simple, according to Ghosh. "A customer who wants a basic product pays a basic fare. A customer who wants valued-added products - seat assignment, prepaid meals, excess baggage, fast-track check-in and the like - is charged a higher price," he said. "Not everybody has to pay for somebody's luxury."
 Ghosh denied that his airline was apprehensive about AirAsia, but conceded that the new rival came with a few advantages.
 "If you look at the way the rupee has moved against the dollar versus the Malaysian Ringgit's movement against the dollar, costs of an Indian carrier have risen by 12-13% while those of a Malaysian carrier have become 3-4% cheaper," he said.
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