India’s newest startup airline, Akasa Air, has shown an interest in ordering up to 100 Boeing 737 MAXs. Backed by prolific investor Rakesh Jhunjhunwala, Akasa is in negotiations with Boeing to secure the MAX for its new narrowbody fleet. The airline is also in talks with regulators to recertify the 737 MAX in India, which remains grounded. Let’s find out more about this potential and why it will be a huge boost for Akasa and Boeing.
Big bets only
According to Moneycontrol, Akasa Air is currently negotiating with Boeing for an order of up to 100 737 MAX aircraft. While we know that the carrier is looking to purchase a 180-seater jet for its ultra-low-cost operations, betting on the 737 MAX is a big move by the carrier.
Akasa Air has been in the news recently and is backed by legendary investor Rakesh Jhunjhunwala. The airline will be run by industry veterans Aditya Ghosh (former CEO of IndiGo) and Vinay Dube (former CEO of Jet Airways and GoAir). This star power has many being optimistic about its plans in the crowded and notoriously low-yield market of India.
Akasa is looking to break into a crowded market of low-cost airlines in India. IndiGo is the market leader by far, with a share of over 50%, while the remaining field is split between SpiceJet, GoAir, and Air India (the full-service flag carrier). As another ultra-low-cost carrier, it will need to truly have a low-cost base to succeed. And the MAX might be the perfect aircraft to achieve this.
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Since 2019, Boeing has been struggling in the rapidly-growing Indian market. The collapse of Jet Airways in 2019 meant the manufacturer saw scores of 737s and billions of dollars in orders wiped out overnight. The grounding of the 737 MAX had already meant SpiceJet and Jet were not taking new deliveries, further reducing Boeing’s fleet share.
Meanwhile, Airbus has been on a roll in India. The European giant supplies aircraft to IndiGo, GoAir, Vistara, AirAsia India, and Air India. While Boeing’s customers face financial struggles, Airbus has seen its India deliveries and order book only rise in the last five years. For Boeing to succeed, it needs a big splash back into India.
A new order for Akasa could be the spark Boeing needs to gain a foothold in India again. The discussion is already yielding results, with one source close to the airline saying,
“The company [Akasa] in its discussion with regulators has said it has made significant progress in negotiations with Boeing to acquire the 737 MAX and intends to start operation by early 2022. For that purpose, the government needs to recertify the aircraft”
Moreover, Akasa will negotiate much lower prices for the beleaguered 737 MAX, which has been grounded for over two years in India. This will represent a win-win for Boeing and the new startup, boosting their presence in India. While Airbus is the safer choice, Akasa could be looking to break the status quo to make its presence felt.
What do you think about Akasa Air’s decision to consider the 737 MAX? Let us know in the comments!