When news of former Jet Airways CEO Vinay Dube’s plans of a new startup airline started doing the rounds early this year, we knew very little about it. But over the last few months, there have been several developments, giving us a relatively decent idea of the shape and form of the airline and its potential plans. Here’s what we know so far.
Origins
Earlier this year, it was reported that the former CEO of Jet Airways and GoAir Vinay Dube was looking to start a new airline in India. By then, he had already convinced Nikhil Ved, Jet’s former head of strategy and planning, to partner up with him.
In January this year, Dube filed for a no-objection certificate (NOC) with the aviation ministry. Still, for the government to approve an airline with national ambitions, it looks at the project’s paid-up capital and board composition. The next step for Dube was to look for an investor who could provide the necessary capital and hold enough credibility for the government to give the go-ahead.
By May, Dube began talking with several investors and by June, had already gotten Rakesh Jhunjhunwala, Per Capital, and some NRI investors on board. Jhunjhunwala’s backing was a huge PR boost for the startup. The ace investor is known for his business acumen and ability to sniff out good deals.
According to ET Prime, Dube did not want to part with more than a 25% stake. But Jhunjhunwala’s commitment of investing $35 million got him around 40% of the company. Former IndiGo chief Aditya Ghosh is also involved and will likely get 2% stock options over the next five years.
The airline has also hired former IndiGo treasury head Ankur Goel as its Chief Commercial Officer. With such industry veterans at the helm, Akasa has had a promising start.
Certification and fleet
While it is said that Akasa had missed its initial deadline of August 15th, there have been reports by the Telegraph India and CAPA that the project received its NOC in early August through a fast-track process. The NOC, however, is just one of many steps the carrier will need to get the all-important Air Operators Certificate (AOC).
As far as the fleet is concerned, Dube has maintained his intention to go for a 180-seat aircraft in a one-class layout from the start. This left him with mainly two options – the Airbus A320 and the Boeing 737. As has become more apparent in the last few months, Akasa is likely to be a 737 MAX operator.
While at Jet Airways, Ved had already worked on acquiring the MAX aircraft for the airline. Dube wanted to tap into Ved’s prior experience and asked him to negotiate with Boeing again. The airline was also considering the A320, but some key factors swayed them towards the MAX.
Firstly, slots for the A320neo were not readily available owing to the popularity of the aircraft. Airbus also has a comfortable lead in India’s narrowbody market and may not have offered a good enough deal compared to Boeing.
The US planemaker has had a rough few years, especially with the MAX program. It was looking to consolidate its position in the Indian domestic market again. Back in June, India had not certified the MAX, and Boeing was willing to offer a discount on the price tag of the aircraft. The deal was so crucial for Boeing that James McBride, director of Boeing’s commercial sales, flew down to Mumbai to negotiate an agreement in the middle of a pandemic.
While no formal announcement has been made, it is believed that Akasa air has ordered between 70 and 100 MAX airplanes from Boeing.
Challenges ahead
Despite all the buzz, Akasa will still have some challenges to face. The Indian market is already dominated by LCCs such as IndiGo and SpiceJet who are expected to put up a huge fight. It also remains to be seen how successful Akasa will be to get important slots at key airports.
Indian flyers still rely on online travel agents a lot for booking tickets, and the concept of secondary airports in major cities is practically non-existent as of now – two key things crucial for an ULCC that Akasa aims to model itself after. IndiGo and the likes will also match any changes in fares and experimentation with ancillary revenue.
For now, we can only wait and see how Akasa plans to iron out these issues.
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