India’s aviation industry could see a new startup airline soon: Akasa Air. The airline is backed by legendary investor Rakesh Jhunjhunwala and is planning to be another ultra-low-cost carrier in the market. Let’s find out more about the carrier’s plans.
After reporting on the airline earlier this month, Akasa Air is officially a reality. The new ultra-low-cost airline has applied to the Ministry of Civil Aviation for its No Objection Certificate (NOC) and is currently under review. Once the NOC is received, the airline can begin planning its operations and receive its crucial Air Operators Certification (AOC).
The airline has caught the attention of many due to the potential backing of one person: Rakesh Jhunjhunwala. The legendary investor is one of the best known in India and is known for his bets in emerging markets, with Indian aviation being one of these in his eyes. In an interview with BloombergQuint, he shed more light on Akasa’s plans.
Jhunjhunwala will take a 40% stake in the airline for $35 million, giving the startup airline a valuation of $87.5 million. So what are the carrier’s plans? And when will it begin flying?
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When it comes to its fleet, Akasa is sticking firmly to the low-cost bible. The carrier plans to operate 70 aircraft in the next four years, making it one of the top five airlines in India. The large fleet will allow Akasa to grow quickly in the market and potentially tap into new routes.
When it comes to which aircraft, Jhunjhunwala dropped a hint only about capacity: around 180 seats. This narrows the field down to just the A320neo or 737 MAX 8 since both seat around that figure in a one-class layout.
While the airline is likely already in talks with manufacturers and lessors, the decision could tilt towards Airbus. This is due to the continued grounding of the 737 MAX in India and no timeline for recertification. However, were Akasa to purchase the MAX and request permission to operate, it could mean cash-strapped SpiceJet would no longer be needed for testing.
We will likely no more about the airline’s fleet once it has secured its NOC, which could be soon.
When it comes to regulatory approval, Jhunjhunwala expects to see Akasa get its NOC by 15th August. This would be a quick process for the airline, allowing for it to plan further along with the launch. The carrier’s team includes a former senior Delta Air Lines executive, but no more names have been mentioned.
If the airline succeeds is a whole other debate. India is a notoriously low-yield and price-sensitive market and has two major airlines collapse in under a decade. However, Jhunjhunwala is confident the low-fare strategy can attract customers, saying,
“For the culture of a company to be frugal you’ve to start off fresh…I’m very, very bullish on India’s aviation sector in terms of demand.”
What do you think about Akasa Air’s plans? Let us know in the comments!