New Delhi: Billionaire Rakesh Jhunjhunwala’s plan to launch an ultra low-cost airline could give plan maker Boeing a chance to regain ground lost in India after the collapse of one of its biggest customers Jet Airways two years ago, according to the industry. officials say.
Jhunjhunwala, known as the Warren Buffett of India for his successful stock investments, plans to work closely with the country’s largest carrier IndiGo and Jet Airways to meet the demand for domestic air travel.
While the plan to launch Akasa Air comes at a time when India’s aviation industry is grappling with the impact of the pandemic, with airlines losing billions of dollars, the sector’s long-term potential makes it a big deal for planners Boeing and Airbus. Hot market.
“There will be a big fight between Airbus and Boeing,” said Nitin Sarin, managing partner at law firm Sarin & Co.
Referring to Boeing’s narrowbody aircraft, Sarin said, “This is a great opportunity for Boeing to step up and step up their game as they have no other major operator for their 737 aircraft in India other than SpiceJet. ”
Details of the venture, including any decision on the aircraft order, have not been formally disclosed, but Jhunjhunwala told Bloomberg that he plans to hold a 40% stake in Akasa, with 70 aircraft with up to 180 seats, within four years. Will be
Jhunjhunwala, who is valued at $4.6 billion by Forbes, did not respond to an interview request. Boeing did not respond to a request for comment.
Low-cost carriers (LCCs), including IndiGo, SpiceJet, GoFirst and AirAsia India, dominate the Indian skies, most of which operate Airbus’ narrowband fleet of aircraft.
Boeing dominates India’s broad market of 51 aircraft, but the fare war and high costs have caused casualties between full-service carriers including Kingfisher Airlines in 2012 and Jet in 2019, making LCC and Airbus even more dominant .
Data from consultancy CAPA India shows that Boeing’s stake in India’s 570 narrowbody aircraft fell to 18% after Jet’s demise in 2018. Jet was recently rescued from bankruptcy and is expected to fly again.
Indian carriers have over 900 aircraft, of which 185 are Boeing 737 aircraft and 710 are Airbus, which counts IndiGo as one of its largest customers globally.
“If you have to rent an aircraft there is abundance and lessees will be happy to provide competitive rates, even better than pre-Covid times,” Sarin said.
However, he cautioned that India is still a difficult place to do business, with regulatory hurdles and costly and less developed airports making LCCs less efficient than foreign markets.
Even as Akasa faces stiff competition in a battered, post-Covid market, which has prompted airlines to renegotiate terms with lessors and sellers, a clean slate And new funds starting with good capital and trim cost will give it an advantage.
Akasa’s other co-founders are Aditya Ghosh, who spent a decade with IndiGo and has been credited for its early success, and Vinay Dubey, former Jet CEO, who has also worked with Delta.
Kapil Kaul, head of CAPA India, said, “It will be a long haul and the new airline will be tested very seriously, but the capitalization and the start team assures that it is possible for them to succeed.”
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