Akasa is an upcoming “ultra low-cost carrier”, or ULCC, being launched by stock market investor Rakesh Jhunjhunwala, who will

hold a 40% stake in the

airline company. . Jhunjhunwala has reportedly planned to launch the airline by April 2022 and has onboarded aviation industry veterans such as
former Jet Airways CEO Vinay Dube and ex-IndiGo President Aditya Ghosh to run the airline. While Dube is expected to be the CEO of the company,
Ghosh is expected to be on the board as Jhunjhunwala’s nominee.

IS THIS THE RIGHT TIME?

• With the 2019 closure of Jet Airways and the weakened
position of other existing players, the airlines industry is
facing a threat of consolidation of market share with the major
players.
• With vaccination rollout gaining momentum, market
participants expect the sector to bounce back.
• Jhunjhunwala is very bullish on the Indian aviation sector in
terms of demand and thinks some of the increment players
will not recover.

THE JOURNEY AHEAD STRATEGY AND RECOMMENDATIONS

• Despite low costs and money flowing in, Akasa’s journey will
not be easy. India is one of the competitve aviation markets in
the world. Profits are rare and margins are razor-thin, with even
the slightest change in any factor (such as fuel prices) sending
the whole industry into a tailspin.
• Airlines are aggressive about their market shares and routes,
leaving little oxygen for new entrants.
• Akasa will be competing against IndiGo, SpiceJet, Go First, and
AirAsia India as budget airlines
• The timeline for Akasa Air also leaves it at risk of falling behind.
Most expect domestic traffic to reach and exceed pre-pandemic
levels by the summer of 2022. This means there will be little in
the way of slots at crucial airports, especially Mumbai and
Delhi, and airlines will already be jockeying for passenger
months in advance.
• Akasa will follow the “ultra low-cost carrier”, or ULCC model. In
the ULCC airline business model, the company focusses on
keeping operating costs even lower than typical budget airlines
like IndiGo and SpiceJet.
• In the ultra low-cost model, there is an unbundling of services
like checked-in baggage, cabin baggage, etc. ULCCs operate
with minimal costs to ensure profitability.
• Akasa’s focus must be on beating IndiGo, SpiceJet, and the
rest on cost alone.
• By not falling for a rapid expansion and a more planned one
instead, Akasa can avoid the debt traps that have bankrupted
airlines like Jet Airways and Kingfisher while leaving others like
SpiceJet on the brink.