India is considered one of major emerging markets for Low-cost carriers for both domestic and international, considering the population and economic growth expected aviation can cater to the needs of different classes of people.
Gone… are the days when travelling by airplane was considered as a luxury. In the new age India with the new generation there is big change for the global players to dominate this emerging market.
No introduction needed, formerly known as “BIG BULL of Indian Stock Market “. Rakesh Jhunjhunwala is the new entry to this market. Considering his history, big fireworks are expected to Indian passengers in terms of airline fares and new air in the Indian aviation market.
Indian Aviation Market
- Currently Indian civil Aviation MRO market, at present, stands at around $900 mn and is anticipated to grow to $4.33 bn by 2025 increasing at a CAGR of about 14-15%.
- India’s passenger traffic stood at 115.37 million in FY21.
- Revenue in aviation can be obtained through Passenger flights and cargo flights.
Scope for Growth
- Market Size:
Considering the population of India and growth expected this has huge growth scope as the below chart.
- Sector Composition:
Cargo and international sectors have good growth in the coming years.
- Government Investments:
- The Government aims to support aviation and created initiatives to support both airline owners and passengers.
- The Government has also given new initiatives to improve aviation infrastructure needed like Airports and allowed new investments also.
- Less Competitors:
- Aviation is a tricky field and running low-cost carriers proves a very big challenge to management.
- Currently only few key players can do efficiently as aviation requires huge cash up front and a very cash burn rich field.
Airline -Indian Market Share
Airline Key Players
The Big Bull Bet… Air Akasa….! Begins taking wings!!
The airline is looking to raise a 100 mn $ for funding of the initial round.
- The “Big Bull Rakesh Jhunjhunwala” is considering investing $35 million to launch 70 aircraft within the next four years.
- Rakesh Jhunjhunwala will hold a 40% stake in the airline.
- Aditya Ghosh, former President of Indigo will be the co-founder of Akasa Air with a 10 per cent stake.
- Former Jet Airways CEO Vinay Dube will be the CEO of Akasa Air with a 15 per cent stake.
- As per media reports, a former senior executive of Delta Air Lines Inc. will be part of the founding team.
Akasa air is said to provide “Ultra-low-cost carrier”, or ULCC.
Currently in market the leading airline manufacturers are:
- Akasa Air may go Boeing aircrafts as part of strategic investment in buying aircrafts the mainly reasons. Boeing after its recent “737 MAX” aircrafts crashes has seen a huge number of order losses and is currently under stress and needs an opportunity to come back.
- “Win – Win” may be the situation here as Akasa needs aircrafts at discount and Boeing needs a huge order in the current situation to revive its debt and production.
- Key Hires carry experience in aviation and previously served airlines like Jet Airways.
- Bhavin Joshi – Senior vice-president of finance and leasing
- Anand Srinivasan – Chief information officer.
- Praveen Iyer – Chief commercial officer
- Belson Coutinho – Marketing
- Adam Voss – Engineering
- Ajit Baghchandani – Inflight services
- Captain Floyd Gracious – Head of operations at the new airline
The Management consists of industry veterans with loads of industry experience and the company has backing of investors.
Management will mainly look at cost cutting and approaching innovative ideas in the market to strive and survive this covid affected market.
Air Akasa Challenges
- Covid Crisis affecting airlines like lockdowns and travel restrictions (Domestic/International).
- Increase in airline fuel price.
- Huge Initial investment required.
- Entry of new private players with good experience in the market.
- Not having a proper aviation infrastructure like Airports, Runways, Airline parking space may increase the cost of operation as India is still developing proper infrastructure for aviation on a larger scale.
- Some of the Competitors in the market like Indigo are already established and taking on will be a big chal1lenge.
- Akasa Air has just received the No-Objection Certificate (NOC) from the Union Civil Aviation Ministry as well as the Directorate-General of Civil Aviation (DGCA).
- Akasa Air flights will operate on domestic routes and are aiming to take off by the end of 2021.
Concluding, the aviation sector is one of the worst hit sectors due to covid pandemic in the current pandemic. Hope the Entry of such a new player will generate new jobs, revive the Indian aviation market and provide passengers with pocket friendly air travel which is most welcomed.
Hopefully this bet will win. Best Wishes!!!!!!!
Risk nahi toh ishq nahi……!!! Welcome Air Akasa……!!!!
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