AirAsia to replicate low-cost model in hotels

The AirAsia group is set to introduce its low-cost hotel business in India, just like the budget air carrier.
 For every facility you ask for in their establishments, branded as Tune Hotels, you pay separately—whether it is 24-hour air conditioning, television, towels or toiletry kit. The daily rate will be Rs 2,000-2,500 but will go for Rs 599 for early bookers. The idea is not to let any room go unmonetised, even if the booking is done at a low rate.
 Tune Hotels, owned by AirAsia’s Tony Fernandes, is investing $30 million (around Rs 160 crore) in a 60:40 joint venture with Apodis Hotels. The company will set up 20 properties in India in the next three years. The first one will open on May 15, in Ahmedabad.
 “When we first started, we thought people won’t understand our business model. It has worked well for us,” said Mark Lankester, group chief executive officer, Tune Hotels.
 On the airline side, the company has tied up with the Tatas. For hotels, it has positioned itself on the same pitch as the Tatas’ budget hotel brand, Ginger. “I don’t think there is any competition. We are hopeful we will be welcomed in the Indian market,” added Lankester.
 To customise its hotels to suit the Indian market, the hotel will have food and beverage options. There will be no room service but there will be an in-house restaurant, the name for which is still in the works.
 The company is also betting highly on the marriage market in India and will provide a banquet facility in most hotels to tap the segment.
 Tune Hotels has wanted to open a property in India for some years but its plans were delayed due to the (global) financial crisis and a drop in lending by banks. The company is planning to set up hotels in Surat, Bhavnagar, Jaipur, Agra and Delhi in the next three years.
 The hotel  brand goes by the ‘great value, great savings’ tagline. The hotels have, as mentioned earlier, a low cost model, similar to the airline, and use a “self-service online booking system”. The daily rate for a room in a Tune Hotel can go as low as Rs 180 during promotional periods.
 While the company will sell its hotels on travel portals like Expedia, MakeMyTrip, Cleartrip, etc, it claims the prices on its own website will always be more attractive. “We want to have repeat customers. We even give promotional offers a year in advance in some cases,” says Lankester.
 So far, the company has hired 20 people for its 100-room hotel in Ahmedabad. With more properties in the pipeline, it will get at least 500 more people on board. “We see high growth potential in India. We haven’t even rushed to China, as we think India has a solid ground for growth,” Lankester said.
http://www.business-standard.com/article/companies/airasia-to-replicate-low-cost-model-in-hotels-113041800319_1.html

 

AirAsia will bank on Expedia to push ticket sales

AirAsia is expanding its distribution network and will rely on online travel portal Expedia to push sales. The airline plans to start domestic service from Chennai with three or four Airbus A320s from the last quarter of the current year.
 Vikram Malhi, country head of Expedia India, said, “As per our joint venture agreement with AirAsia, Expedia will have exclusive online distribution of AirAsia tickets. The availability of AirAsia tickets on any other online portal is temporary and the contract will expire in June 2013.”
 The development has led to a disquiet  amongst other Indian portals, which had partnered the Malaysian airline to sell its inventory on India-Kuala Lumpur and India-Bangkok flights."This relationship will also help Expedia, in both the inbound as well as outbound sector, with the airline’s Indian arm connecting to the various smaller cities in the country and taking the Indian traveller to many great destinations in and beyond South East Asia, along with the widest hotel availability support across the globe,” added Malhi.
 AirAsia runs a joint venture portal with Expedia and it is an exclusive online distribution channel for the airline. Last week, AirAsia-Expedia's CEO Kathleen Tan was in Delhi to discuss the development plans and strategies for the portal in India.
 Tan, who took over recently, was the commercial head of AirAsia earlier, responsible for its sales and marketing initiatives. She is also credited with launching mega discount offers, which the airline uses from time to time to push sales.
 "We have been strengthening our reach and visibility in the Indian market since the brand launch, with 360 degree brand campaigns and have been fairly successful, with over 200 per cent year-on-year growth since 2011,'' said Malhi.
 About 85 per cent of AirAsia's global sales take place through its own website. In India, with web penetration being low, airlines rely on offline travel agents and portals. AirAsia's travel trade partners have increased 30 per cent over the past few months, sources said.
 In India, the airline made the exception by adding more online partners including MakeMyTrip and Yatra.com. However, now the airline seems to have changed its distribution policy.
 For the past few months, MakemyTrip has been offering AirAsia tickets. Even today, the portal was offering the low cost airline’s tickets for travel beyond June.
 Yatra.com, too, has tied up with the airline but has not begun offering tickets as network integration was incomplete.
 AirAsia did not respond to an email questionnaire on the issue. Yatra.com, too, did not respond, while a MakeMyTrip spokesperson said it would not like to comment on airline's internal matters.
http://www.business-standard.com/article/companies/airasia-will-bank-on-expedia-to-push-ticket-sales-113041801075_1.html

Delhi, Mumbai airport operators oppose more flights to Etihad

The GMR and GVK groups, which run the Delhi and the Mumbai airports, respectively, have strongly opposed a plan to increase air traffic rights between India and Abu Dhabi, fearing an adverse impact on their hub prospects. The two companies have taken up the issue of opening up the skies to United Arab Emirates (UAE)-based Etihad Airways with the civil aviation ministry, which would negotiate an air service agreement with UAE next week.
 Air service agreements dictate the frequency, number of seats and destinations for airlines operating between two countries. Typically, the benefits are reciprocal in nature. The Delhi airport’s opposition comes in the wake of Jet Airways’ plans to seek 40,000 additional seats between India and Abu Dhabi.
 A Jet Airways spokesperson said, “Jet Airways has evaluated the business, tourism and travel potential of the Indian market on the basis of a comprehensive assessment and has, accordingly, applied for the grant of additional capacity entitlements to increase services to Abu Dhabi. The airline has a network strategy and a fleet induction plan to support this growth. The expansion is intended to provide a wider consumer choice to the Indian traveller by connecting 23 cities across the country to the international market, with a proven Indian product.”
 “Through the last nine years, Jet Airways has emerged as one of India’s best known international service brands, which has enabled the airline to not only compete successfully with foreign carriers for a share of the international traffic, but also grow its market share in a highly competitive global environment. Jet Airways is of the belief that growth by an Indian carrier with nationwide presence would further facilitate tourism inflows to the country and promote trade and commerce,” the spokesperson added.
 Currently, airlines from both sides are allowed 13,000 seats a week. Following Etihad’s acquisition of stake in Jet Airways, the UAE-based airline would tap into the Indian market to feed its global routes. This has led to jitters among Indian airlines and airports. The move, aviation sources said, would impact all other airlines, especially Air India, which flies to Europe and the US. “Not even Emirates has been allowed so many seats at one go. Etihad can demand a similar number of additional seats,” said an executive at a private airline.
Jet Airways flies to Abu Dhabi from Mumbai and Delhi, while Etihad connects 10 UAE cities with India. That these airlines are demanding additional seats and opening of new routes has led to concern for the Mumbai and Delhi airports, as this would mean passengers would have to travel through two cities to connect to international destinations.
 On such matters, typically, the civil aviation ministry obtains the views of the stakeholders concerned, including airport operators. “The Airports Authority of India, as well as private airport operators, has invested heavily in the modernisation of India’s gateway airports, which are now well equipped to handle transfer traffic on a large scale. The two major gateway airports, Delhi and Mumbai, currently account for about 50 per cent of international capacity. The development of a hub at closer proximity would adversely impact further growth of these gateways as hubs. The recovery of investment and growth of these airports, as well the benefits associated with a gateway airport, would also have an adverse impact,” a Delhi International Airport spokesperson said in an email response.
 “As an airport operator, we have evaluated the current capacity between India and Abu Dhabi and have raised our concerns/reservations in this regard,” he added.
 “We have expressed our reservations (about increasing traffic rights),” said a Mumbai International Airport spokesperson.
 The Delhi airport has been modernised at a cost of Rs 12,857 crore. Currently, it is the busiest airport in India, handling about 900 flights a day, including 200 international movements. Last year, it handled 35.71 million international movements. The cost of modernising the Mumbai airport is pegged at Rs 12,380 crore. The airport handles 750 daily movements, including 200 international ones.
 Last year, Prime Minister Manmohan Singh had announced plans to develop Delhi and Chennai as aviation hubs. The aviation ministry had prepared a consultation paper, outlining measures to encourage airlines to increase flights from Indian hubs, as well as passenger traffic.
 According to the civil aviation ministry data, in 201011, 37 million passengers flew to/from India. Of these, 11.4 million were connected by hubs outside India. This essentially means 11.4 million had flown via transit points such as Dubai and Singapore, instead of taking a direct flight from India.
http://www.business-standard.com/article/companies/delhi-mumbai-airport-operators-oppose-more-flights-to-etihad-113041801003_1.html

SpiceJet allots 3.59 cr shares to Kalanithi Maran, raises Rs 130 crore

MUMBAI: Low-cost carrier SpiceJetBSE 3.03 % today raised about Rs 130 crore by allotting 3.59 crore equity shares to promoter Kalanithi Maran.
"The company has allotted 35,931,453 equity shares of Rs 10 each, to Kalanithi Maran, promoter of the company, pursuant to conversion of 13 million 14 per cent unsecured compulsorily convertible debentures of the face value of Rs 100 each, at a conversion price of Rs 36.18 per equity share," Spicejet said in a filing to the BSE today.
The overall holding of promoters in the airline stands at 48.59 per cent at the end of March quarter.
The airline currently operates more than 350 daily flights to over 50 Indian cities and 8 international destinations.
Shares of the company ended the day 3.03 per cent up at Rs 30.60 on the BSE
http://economictimes.indiatimes.com/markets/stocks/stocks-in-news/spicejet-allots-3-59-cr-shares-to-kalanithi-maran-raises-rs-130-crore/articleshow/19617847.cms

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.
http://economictimes.indiatimes.com/news/news-by-industry/transportation/airlines-/-aviation/with-air-asia-set-to-fly-in-indigo-urges-government-for-level-playing-field/articleshow/19625542.cms