We do not aspire or have any ambition to be an ultra-low-cost carrier: Vinay Dube, founder, MD and CEO, Akasa Air

Aviation doesn’t have to be a cash-guzzling business, says Vinay Dube.

Akasa Air, the country’s newest airline, is moving ahead full throttle with its plans to get its first aircraft in April 2022 and launch operations by May-June despite the outbreak of the third wave of COVID-19 in India.

The airlines’ founder, managing director and chief executive officer Vinay Dube in an interview with Moneycontrol said that Akasa Air will not be an ultra-low-cost carrier but an affordable one that hopes to fly people who have never boarded a plane.

In the first 18 months of operations, Akasa Air intends to serve domestic routes with a focus on metro to tier-2 cities and, thereafter, expand to international destinations, Dube said.

He felt that aviation doesn’t have to be a cash-guzzling business and that, if done correctly, airlines can have a sustained level of profitability.

Edited excerpts:

What is the main motivation behind starting a new airline in India, a market that has historically been a tough market to operate airlines?

India’s economy is going to grow, and we have a very bright future ahead of us as a country. I think Indians will continue to have more disposable income with a growing middle class and we would like to participate in that growth process. We want to serve our country by being one of those companies that helps create these strong transportation links which are the underpinning of any economic growth engine.

Even now, there are many people in India who have never taken a flight and we want to cater to them as much as we will focus on a frequent flyer. It is that purpose and the thought of democratisation of air travel to make it affordable for every single Indian that motivated us to start Akasa Air.

Aviation demand in India is expected to stay muted for at least the next few years. Given that, which sectors will Akasa Air target to start operations? What are Akasa Air’s plans for regional routes?

While COVID-19 has surely impacted air travel, we believe that it is a short-term impact. India is one of the fastest-growing aviation markets in the world with unparalleled potential and we see decades of growth ahead of us in all segments of the market.

We will limit ourselves to domestic routes in the first 12-18 months, focusing on the metro as well as tier-2 and tier-3 cities. The Boeing MAX aircraft range allows us to operate across the SAARC, ASEAN and Middle East regions and we will explore such opportunities as soon as practical.

When is Akasa Air looking to start operations? What were the major hurdles that Akasa Air faced and what challenges do you see ahead before you can start operations? When do you expect to get your first Boeing 737 aircraft? And how many do you aim to get in the next two years?

We expect our first aircraft delivery in the second half of April 2022 with the intention to start commercial operations by late May/early June of 2022.

With respect to starting the airline, we are extremely thankful to the civil aviation ministry and the DGCA (Directorate General of Civil Aviation) for their guidance and support on all required regulatory clearances.

We have received our NOC (no-objection certificate) and our next key milestone is the air operator permit. We are working closely with the regulatory authorities and following all the required processes to comply with the requirements to obtain this certification. We hope to satisfy all regulatory requirements for this certification by late April 2022.

Ever since the first announcement about Akasa Air, there have been rumors that the airline will be an ultra-low-cost carrier (ULCC). If so, how do you plan to reduce operating costs further in India?

Thank you for asking this question. I would like to correct this perception or misrepresentation—we do not aspire or have any ambition to be a ULCC. We certainly want to have a competitive cost structure and that is a part of setting up Akasa Air correctly from day one.

We will be a low-cost carrier. We will have a single fleet type with all-economy seats and buy-on-board service. We want to be an affordable airline that is dependable, warm, efficient, and reliable and focuses on customer service.  Being warm, considerate, and efficient in the way we treat our customers will be a core focus of ours.

How many pilot and crew members have you hired for Akasa Air till now and how many more would you need to start operations?

We have over 50 employees on board today and expect to gradually fill relevant positions including all cabin, cockpit, and frontline roles based on key milestones leading to the launch of our first commercial flight. We expect to have around 18 aircraft by the end of March 2023 and the employee strength of Akasa Air will be commensurate with the level of our operations.

I must add here that since we started accepting resumes about two weeks ago, we have received an overwhelming number of applications for which we are very happy and thankful for. We consider ourselves extremely fortunate that so many aspiring candidates have taken the trouble to apply to us and it’s our commitment that we will fairly evaluate all applications.

Due to the outbreak of COVID-19, airlines have started growing their share of the revenue from cargo operations. Does Akasa Air also plan to foray into cargo operations?

Yes, absolutely. The cargo business is a very important part of our overall plan and we will have a dedicated team focusing on that.

How do you think the entry of many new players will affect the Indian aviation market? Will the rise in competition lead to more financial constraints for players?

We are completely focused on ourselves and being disciplined and professional in what we do. Creating a well-capitalised and sustainable cost structure, focussing on warm and efficient customer service, and building a workplace where our employees feel proud of the brand is what we believe will help us succeed.

The industry has been in talks with the government on unbundling of fares. How important is fare unbundling in the Indian market?

We believe that our customers should get value and pay for what they use. Fares are largely unbundled in India although there is still some room for further unbundling compared to other more mature aviation economies.  Having said that, we will follow all regulatory and consumer-related policies that inevitably are reviewed from time to time.

What are some steps that the government can take to alleviate concerns surrounding the Indian aviation industry?

To create a stronger and sustainable aviation ecosystem, we believe that all stakeholders need to play their part.  While Indian aviation has come a long way over the last decade, as an industry there is still a lot more that we can do. To begin with, we will play our part by creating a dependable airline, offering warm and efficient customer service, reliable operations and affordable fares and over time we will work with other stakeholders on improvements that can be made to the aviation ecosystem.

Aviation has historically been a cash-guzzling business. Does Akasa Air plan any more fund infusion in the next couple of years? What are Akasa Air’s CAPEX plans looking like in the next few years?

I don’t think aviation is a cash-guzzling business. My view is that, if done correctly, airlines can have a sustained level of profitability. Having a well-capitalised airline is very important, which is where we are now. We have raised all the capital that we believe we require for now. If we have additional capital requirements in the future, we will not hesitate to raise additional funds.

What is Akasa Air’s outlook for aviation in India over the next decade?

India is one of the fastest-growing aviation markets in the world with an unparalleled potential and we see decades of growth ahead of us in all segments of the market. We at Akasa Air want to participate in this growth engine and play our part.