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AirAsia sparks fare war with first India flight

Asia’s biggest budget carrier AirAsia is set to make its maiden Indian flight this week, fuelling a cut-throat fare war in a sector already reeling from losses.

AirAsia India will take off on Thursday with an eye-catching promotional fare of 990 rupees (USD 17) for flights between high-tech hub Bangalore and the popular coastal resort of Goa — cheaper than a second-class train ticket.

“The price war has already begun and will only intensify in the lean July-September quarter,” Amber Dubey, partner at global consultancy KPMG, said.

The carrier’s founder and chief executive Tony Fernandes — a millionaire ex-music executive who styles himself as Asia’s answer to British tycoon Richard Branson — is a hardened discount-fare warrior.

But analysts warn that Fernandes could find the ride more turbulent than he reckoned in India, where no-frills carriers already dominate with a near 65-per cent market share in the country of 1.2 billion people.

“India could be AirAsia’s greatest test,” said Kapil Kaul, head of India operations for the Centre for Asia Pacific Aviation (CAPA), a consultancy.

The company will start with just one plane — less ambitious than the three-to-four aircraft first envisaged — but aims to scale up to 10 planes and 10 cities by the end of the fiscal year in March 2015.

Malaysia-based AirAsia, whose net profit leapt 33 percent to 140 million ringgit (USD 43.6 million) in the past quarter, is hoping to break even in India within four months through ambitious operational targets.

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