MIND GAMES

San­jiv Kapoor says costs are sim­i­lar for all car­ri­ers here

The Economic Times - - Companies - OUR BUREAU

Barely a month be­fore AirAsia In­dia fi­nally takes off, the air is thick with barbs and pot­shots. Three days af­ter Tony Fer­nan­des took a pot­shot at In­dia’s big­gest car­rier In­diGo on Twit­ter, the chief of AirAsia’s other In­dian ri­val crit­i­cised its low­fare model say­ing it won’t work in the face of high costs in In­dia. San­jiv Kapoor, COO of SpiceJet said AirAsia’s low-cost model won’t work in In­dia in the face of high costs. “There is one way to of­fer fares lower by 30-35% than mar­ket rates; that is to have a 30-35% lower cost struc­ture. Given fuel and other costs are sim­i­lar for all play­ers in In­dia, that kind of cost ad­van­tage can only come from lower air­craft and as­set costs. You can have that kind of cost ad­van­tage if, maybe, part of your costs are re­flected in Kuala Lumpur and not in In­dia,” Kapoor told re­porters in a press con­fer­ence in Delhi. Kapoor was re­fer­ring to a re­cent claim from AirAsia In­dia CEO Mittu Chandilya. In­dian car­ri­ers are bleed­ing from high in­put costs, pri­mar­ily fuel prices, bor­row­ing rates and dol­lar-de­nom­i­nated pur­chases. AirAsia, known for its ag­gres­sive pric­ing the world over, is likely to start lo­cal In­dia ser­vices in June, af­ter cross­ing a spate of hur­dles which in­cluded fu­ri­ous lob­by­ing from lo­cal car­ri­ers. Many be­lieve the mind games and cross-fir­ing of words are set­ting the stage for a fu­ri­ous bat­tle in the skies. On Tues­day, AirAsia chief Tony Fer­nan­des di­rectly pointed to­wards In­diGo, the coun­try’s top car­rier by mar­ket share, say­ing what­ever the car­rier tried to do to stop his (Tony’s) air­line just made it “stronger and smarter”. Ear­lier, he had tweeted a photo of In­diGo owner Rahul Bha­tia, whom he met at an event, joc­u­larly draw­ing in­fer­ences from a box­ing match. In­diGo has never re­sponded pub­licly. But Chandilya and Kapoor have in­dulged in Twit­ter ban­ter. On the en­try of AirAsia In­dia’s first reg­is­tered air­craft into Chen­nai in March, Chandilya pointed out that the planes have leather seats. Kapoor, who fol­lows Chandilya on the mi­cro blog, quipped the In­dian low-fare car­rier too, has all leather cov­ers in its seats. Chandilya was quick to counter “On the leather seats, you mean to say let’s not make a song & dance about it” in a thinly-veiled ref­er­ence to SpiceJet’s re­cent trou­ble with the coun­try’s avi­a­tion reg­u­la­tor af­ter its crew de­cided to give an in-flight dance per­for­mance for its pas­sen­gers. Kapoor caught on with a “touche!” but said he sus­pected “AirAsia, too, will be singing a dif­fer­ent tune in In­dia too now when host­ing in-flight par­ties!”

Also, in a re­cent in­ter­view to ET, Chandilya said SpiceJet had “to do a lot of work to clean up what they are run­ning”. The car­rier re­cently posted a record an­nual loss of .` 1,003 crore, hurt by high in­put costs, a weaker ru­pee, slow de­mand and tough com­pe­ti­tion. Ear­lier in the day, SpiceJet in­tro­duced its up­graded in-flight menu via a tie-up with Ta­jSats and Café Cof­fee Day. Also, on Fri­day Kapoor de­nied a me­dia re­port that the air­line is in talks with Qatar Air­ways to sell air­port slots.

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