A brand new ultra low-cost airline is set to take off amid India’s aviation sector troubles.
On Oct. 11, billionaire Rakesh Jhunjhunwala-backed SNV Aviation got initial clearance, merely days after the veteran stock trader met up with prime minister Narendra Modi.
The airline is now expected to begin operations as early as next year under the brand Akasa Air. The directorate general of civil aviation’s (DGCA) permission is expected soon.
For this venture, Jhunjhunwala has joined hands with two seasoned aviation industry professionals: Aditya Ghosh, former CEO of IndiGo, the country’s biggest airline, and Vinay Dube, former CEO of Jet Airways.
Many congratulations to #VinayDube and Team #AKASA on receiving the NOC from MOCA as it embarks on its journey to offer Indian flyers a warm, efficient, reliable and affordable travel experience with an endeavour to be the nation’s most dependable, affordable and greenest airline
— Aditya Ghosh (@iamadityaghosh) October 11, 2021
Akasa will take wings at a time when “pandemic-hit Indian aviation industry is expected to report a net loss of Rs25,000-26,000 crore while its debt level may increase to Rs1.2 lakh crore in the ongoing fiscal year,” according to credit ratings agency ICRA.
The newbie’s plans, however, are ambitious.
Akasa Air, with its likely low fares, will directly challenge market leader IndiGo besides other low-cost carriers SpiceJet and Go First.
It is reportedly readying one of the biggest aircraft purchase or lease deals of the year outside the US, involving at least a hundred Boeing 737 planes. In August, India lifted a ban on the company’s aircraft, in place since March 2019 following two deadly accidents involving them in Indonesia (2018) and Ethiopia (2019). Over 300 people died in these tragedies.
In July, Jhunjhunwala told Bloomberg that Akasa Air will have 70 aircraft in its fleet initially. He also hinted at investing up to $35 million in the airline and, according to media reports, will own a 40% stake in it.
Jhunjhunwala, often known as India’s Warren Buffett owing to his stock market success, has invested in the country’s aviation sector at a time when leading airlines have been bleeding.
Yet, Jhunjhunwala remains unfazed.
“I’m very, very bullish on India’s aviation sector in terms of demand,” he told Bloomberg Television earlier this year. Since many “small players” will not be able to recover from the pandemic shock, he had said, there will be “aviation assets to prey on.”