Moneycontrol PRO
UPCOMING EVENT:Attend Traders Carnival Live. 3 days 12 sessions at Rs.1599/-, exclusive for Moneycontrol Pro subscribers. Register now!
you are here: HomeNewsBusiness

3 Big Factors That Will Decide If Rakesh Jhunjhunwala’s Akasa Airlines Will Succeed

The airline’s ambitions are sky-high, but a number of factors will decide how high it soars in the Indian aviation market, which has laid low many an airline and tycoon in the past. The kind of planes it flies and the hub it chooses will play a role in determining success or failure. Moreover, it may have a dream team in the cockpit, but profitability will still depend on how Akasa Air performs, how IndiGo responds, and how Spicejet and GoFirst fare

August 09, 2021 / 10:08 PM IST
Representative image (Source: ShutterStock)

Representative image (Source: ShutterStock)

There was little action in the first half of 2021 in the aviation sector. The repeated news about Jet Airways 2.0 fighting for slots and various stakeholders taking opposing views on the matter-dominated the headlines for much of the year. Cut to the second half and it seems like Jet Airways 2.0 is struggling to be in the news. Every inch of the aviation news space is now occupied by the Rakesh Jhunjhunwala backed Akasa Air.

CNBC-TV18 reported that the airline has obtained a No Objection Certificate from the ministry along with a confirmation that its base would be Bengaluru. The NOC is one of many steps leading up to the Air Operating Permit (AOP).

While India has been a very difficult market to operate in and only a handful have made money, if at all, the sector is seeing a wave of hope in Akasa. A company that traces its roots to former Jet Airways CEO Vinay Dube has registered domains such as akasaairlines, flyakasa, akasaair and airakasa.

Also Read: Is Rakesh Jhunjhunwala’s Akasa another pie in the sky?

But three factors could be gamechangers for the airline and its soaring ambitions.


Fleet selection

While there is a slump in air travel across the world, the opening up of the US and Europe has brought some hope. Leading carriers from North America have started getting aircraft back from long-term storage and are seeing a sharp spike in traffic. This could translate to cheaper lease rentals vanishing from the market.

A new deal is important for both Airbus and Boeing, but more so for Boeing. The Chicago-headquartered company has only a limited narrow body presence in India. Air India Express, Spicejet and Vistara operate the B737. The MAX remains grounded (since March 2019) with the Indian regulator yet to give the go-ahead to start operations within India.

Fleet selection is also crucial based on the manpower available in the market. A large portion of the Indian domestic fleet is from the A320 family and while trained manpower can be poached, it could be easier to poach from Spicejet, where employees have been on the receiving end of policies. The B737 family, thus, could give it a much-needed boost against the competition.

Preliminary reports have suggested that the airline would be a ULCC and is thus likely to have a single fleet type. But will it surprise everyone with two sub-fleets or a different type like the A220 or the Embraer E2? Any aircraft that helps keep costs low is a good aircraft in a market where the one with the lowest costs is known to win the game.

Main Base – Slots, Night Parking and more

Reports have indicated that the airline may have its base in Bengaluru. For close to a year, Jet Airways 2.0 has been fighting to get its slots back and raising questions about viability in the absence of slots and here is an airline that wants to come on the scene without worrying about slots. It remains an open question whose slots they are, but there is no denying the fact that airports are always ready to welcome new carriers, new routes and that means slots from the airport pool are always given on priority to a new carrier. It's the same with night parking.

Also Read: Rakesh Jhunjhunwala-promoted Akasa Air’s holding company SNV Aviation registered using Vinay Dubey's address

With Mumbai congested and Delhi in the middle of an expansion, the capacity situation at Bengaluru is welcoming. The recently opened second runway, along with work for the second terminal, would mean availability of night parking, counters and slots — a trio that is difficult to obtain at any other major airport right now.

With more capacity in the pipeline at Delhi and Hyderabad along with relative availability at Kolkata, the airline’s route network would be dictated by airport infrastructure until Jewar and Navi Mumbai are operational. Bengaluru has also grown in terms of its economy, with the likes of Tesla making their base in the city in addition to many IT giants. The non-stops from Seattle and San Francisco by airlines is a testimony of the growing clout of Bengaluru in overall air traffic.

Distribution and systems

While it is too early for the airline to look for distribution, India is not a country where the usual ULCC way of distribution — direct bookings — works. AirAsia India tried that in the initial days, only to face headwinds and move back to traditional ways of working with OTAs and Travel agencies, who dominate the market.

The dealbreaker or dealmaker for the airline could lie there.

Tail Note

While the team has formidable and reputed players at the helm of affairs, almost all airlines in the past have had similar teams. This has never assured profitability and that would still be dependent on how Akasa performs, how IndiGo responds, and how Spicejet and GoFirst fare. Akasa’s roadmap talks about 70 planes in five years, which if achieved, will be more than what GoFirst has inducted in fifteen years, and that could make the difference!
Ameya Joshi runs the aviation analysis website Network Thoughts.

stay updated

Get Daily News on your Browser
ISO 27001 - BSI Assurance Mark