Akasa Air - Jet Airways Reinvented

[ShruteSastry]

Will India’s Akasa Air Succeed In The Crowded Market?

In recent weeks, Indian aviation has been eying a hotly anticipated startup: Akasa Air. The newest low-cost airline in the market has attracted major investors and comes with celebrity power not seen in years. But can Akasa Air succeed in a crowded and tight margin market? How does the airline plan to market itself? Let’s find out.

Akasa Air hopes to take off by next summer, just as Indian aviation will make a full recovery. Mockup Livery: Simple Flying

History

In March, we reported that former Jet Airways and GoAir CEO Vinay Dube was looking to start a new airline. Little was known about the airline then, including its name, fleet, or even realistic date for a first flight. With little investment at the time, it seemed that the carrier had a long way to go.

Fast forward three months and Dube’s airline is in the spotlight. Now named Akasa Air, the carrier has attracted a major investment from legendary investor Rakesh Jhunjhunwala, commonly known as the Warren Buffett of India. Getting Jhunjhunwala onboard has been a huge PR coup, attracting attention to the airline and reeling in more investors in recent months.

 

Dube struggled for months to find investors in his new airline, especially as other players in the market faltered. Photo: Getty Images

According to The Economic Times, Jhunjhunwala formally invested ₹247.5 crores ($33.3 million) at the end of June. Funding will slowly be released in the coming months to take Jhunjhunwala’s stake to 40%. He has currently given the airline ₹43.75 crores ($5.88mn), equivalent to a 9% stake. Soon after, a Dubai-based Indian investor also added funds, allowing the airline to meet its funding goal to receive its No-Objection Certification (NOC) from the government.

Founder Vinay Dube and his family currently own 70% but will see this stake decrease as more investors pour money into the carrier. But what does the airline have planned?

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MAX out

One of the most expensive components of starting an airline is acquiring a fleet. Striking an aircraft deal early and with the right manufacturer can benefit an airline for years to come. This is exactly what IndiGo did, India’s biggest airline and an all-Airbus operator.

In 2005, IndiGo signed a 100 aircraft order with Airbus for the A320, the biggest deal in Indian aviation history. Behind the scenes, the carrier had capitalized on Airbus’ desperation to enter the Indian market and take market share from Boeing. This allowed the airline to have the lowest cost base, a factor that has let it succeed for the last decade and a half years. Fast forward 15 years, and Akasa might have the same golden opportunity.

 

Boeing is pushing hard to revitalize its presence in India. Photo: Getty Images

Boeing’s fortunes have turned sharply in India. After dominating the narrowbody fleets in the early 2000s, the entry of budget airlines disrupted the planemakers plans. As Airbus’ popularity with budget airlines grew, Boeing was struggling to garner major orders.

The 737 MAX alleviated some of these struggles, but all of this went away with the type’s grounding in March 2019. A month later, Jet Airways collapsed, leaving Boeing with a tiny market share in India’s narrowbody market.

Now, Boeing has another shot at the Indian market. Reports indicate that an order for 70 to 100 737 MAX 8s is already decided and an announcement is around the corner. According to a report in ET Prime, Akasa’s order is so pivotal that Boeing’s Director Commercial Sales, James McBride, flew down to Mumbai in the midst of the pandemic to secure the deal. Once the deal is announced, it will mark the start of a new era for Boeing and Akasa Air.

Tough

Despite low costs and money flowing in, Akasa’s journey will not be easy. India is one of the competitve aviation markets in the world. Profits are rare and margins are razor-thin, with even the slightest change in any factor (such as fuel prices) sending the whole industry into a tailspin. Airlines are aggressive about their market shares and routes, leaving little oxygen for new entrants.

In this backdrop, Akasa’s focus must be on beating IndiGo, SpiceJet, and the rest on cost alone. By not falling for a rapid expansion and a more planned one instead, Akasa can avoid the debt traps that have bankrupted airlines like Jet Airways and Kingfisher while leaving others like SpiceJet on the brink.

The exclusive use of the 737 MAX 8 will make Akasa one of the most efficient airlines in India. . Photo: Boeing

The timeline for Akasa Air also leaves it at risk of falling behind. Most expect domestic traffic to reach and exceed pre-pandemic levels by the summer of 2022. This means there will be little in the way of slots at crucial airports, especially Mumbai and Delhi, and airlines will already be jockeying for passengers months in advance. Akasa has reportedly chosen Bangalore as its first base, which has ample slots and demand in the short term.

 

Barring the collapse of another Indian carrier, Akasa will be competing against IndiGo, SpiceJet, Go First, and AirAsia India as budget airlines. Once it enters trunk routes, you can add Air India, Vistara, and the restarted Jet Airways to the list. However, none of this looks to deter Akasa, which is pushing ahead with its plans.

What to watch out for

If you’re tracking the future of Indian aviation, Akasa Air is an important symbol. The airline’s first hurdle will be receiving a NOC (No Objection Certificate) from the Ministry of Civil Aviation. This has been slowed in the past due to a lack of capital and questions over board composition, but those should be ironed out soon. A previous timeline of August 15th for the NOC has been missed.

Once the NOC is issued, Akasa’s plans will be reviewed by the DGCA, which controls the all-important AOC (Air Operators Certificate). Only once the airline has an AOC can it begin selling tickets and start flying passengers.

The ungrounding of the 737 MAX is another sign that Akasa is nearing the launch of flights. Photo: Getty Images

A lot could go wrong in the next 8-10 months. However, with funding and industry veterans behind the airline, there is potential for Akasa to become the next big disruptor in the post-pandemic industry.

[ShruteSastry]

Source: https://simpleflying.com/akasa-air-india-market/

[Battu123]

[covid2021]

inka akasam lo ala alaa 

[ShruteSastry]

7 hours ago, covid2021 said:

inka akasam lo ala alaa 

Ala ala....

[sri_india]

Jai Rakesh junkunwala....