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AirAsia India puts growth plans on hold

AirAsia India has halted its expansion plans after just a year in business as it waits for a government decision on whether to change a measure regulating overseas flights, the budget carrier’s chief executive said.

The airline, part-owned by Malaysia’s AirAsia Bhd, has carved out a 1 per cent share of a market enjoying double-digit annual growth in passenger numbers. But it has been losing money because of high operating costs and frequent price wars with rivals such as IndiGo Airlines.

The carrier planned to bring in a plane a month from March to build a fleet of at least 10 jets by the end of the year. That would allow it to ply dozens of less-competitive routes to small Indian cities, before starting flights overseas that connect passengers with AirAsia’s networks across Asia.

The airline now has five short to mid-range Airbus A320 jets but will not lease any more until the government decides whether to retain or reform its so-called 5/20 rule, Mittu Chandilya said in an interview this week.

“We’ve said let’s have a wait and see approach,” he said.

The rule requires a carrier to be 5 years old with a fleet of 20 planes before it can fly abroad. It is unique to India and was aimed at growing the nascent domestic aviation industry.

“There were promises about getting some clarity on that before we launched,” said Mr Chandilya “I haven’t seen anything from this government that is about open skies and free markets.”

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