AirAsia JV in India will face challenges: SpiceJet chief

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SpiceJet believes that the upcoming AirAsia joint venture in India will face plenty of challenges before it can become a viable competitor.

Malaysia's AirAsia has set up a joint venture with Indian conglomerate Tata Sons to create a new Indian low-cost carrier that will be based in Chennai. It is now waiting for approvals from the civil aviation ministry before it begins domestic operations with up to three aircraft.

That will put it in direct competition with SpiceJet, which has a 30% share of the market out of Chennai with nine aircraft based in the city.

SpiceJet chief executive Neil Mills says that AirAsia will face challenges in finding ways to deal with the regulatory issues in India.

"This is not Malaysia. They can't try to change the policies to suit them. There are many things that they will need to overcome and it may be harder for them than they expect," says Mills.

He points out that there are no new slots available out of Chennai in the morning peak periods, which means that AirAsia may not get the flights that it wants. He adds that the airports themselves may not be ready for AirAsia.

"To register an aircraft in India, you need to have a letter from the airport saying that you have an allocated parking space. There aren't that many in Chennai. So I don't know how many aircraft they can bring into the country," says Mills.

AirAsia will also find it hard to keep its costs down if it is not able to get enough aircraft into the country, he adds. Scale and high aircraft utilisation are absolutely necessary in order to make money in India, he adds.

He adds that SpiceJet is ready to face the competition, whether from AirAsia or from the other Indian airlines. "Competition is not new for us and we are prepared not matter where it comes from," says Mills.