oppn parties Is Rakesh Jhujhunwala Placing A Safe Bet With Akasa Air?

News Snippets

  • Kapil Sibal leaves Congress, fills nomination for Rajya Sabha with SPs backing
  • RBI bans 5 NBFCs as it cracks down on e-lending platforms
  • Hindustan Motors to tie-up with Peugeot to bring out a redesigned version of the iconic Ambassador
  • GST Council to defer rate rejig due to inflation
  • Centre to sell 29.5% in Hindustan Zinc at an expected price of Rs 38000cr
  • Stocks remain negative on Wednesday: Sensex loses 303 points to 53749 and Nifty 99 to 16025
  • IPL: RCB beat LSG by 14 runs and end their dream run. Rajat Patidar scores a brilliant 112. RCB will take on RR to decide who goes through to the finals
  • Delhi Additional district judge Nikhil Chopra says there is no legal right for people seeking to worship deity inside Qutab Minar, says it survived 800 years without worship so "let it survive like that"
  • Punjab chief minister Bhagwant Mann sacks state health minister Vijay Singla over corruption charges. Singla was later arrested by the ACB
  • Protestors burn the house of Andhra minister P Viswaroop and MLA Satish Kumar over renaming of Konaseema district as B R Amberdkar Konaseema
  • Gyanvapi: Varanasi district judge decides to first hear the 'maintainability' plea filed by mosque management
  • Delhivery and Venus Pipes shares list at premium of 10% and 8.7% respectively even when market sentiment was down
  • In a bid to cool edible oil prices, Centre allows duty-free imports of 20 lakh tonnes each of crude sunflower oil and crude palm oil per annum this year and next
  • Centre caps sugar exports to ensure availability of stocks in the domestic markets to cool prices
  • Stock markets get the jitters as RBI signals rate hike and government moves in to control inflation: Sensex tumbles by 236 points to 54052 and Nifty goes down by 89 points to 16125
Yasin Malik of JKLF gets two life terms in terror funding case /////// Kashmir TV artist killed and her nephew injured in a terror attack in Hushroo in Budgam district
oppn parties
Is Rakesh Jhujhunwala Placing A Safe Bet With Akasa Air?

By A Special Correspondent
First publised on 2021-07-29 11:53:25

Billionaire investor Rakesh Jhunjhunwala has teamed up with aviation veteran and former CEO of the troubled (but now under revival) airlines Jet Airways, Vinay Dube and others to propose a new low-cost airline Akasa Air that is slated to hit the skies by the end of this year if all goes well. Jhunjhunwala is investing Rs 260cr for a 40% stake in the venture and despite the present dismal situation in the sector, is quite upbeat about the future of the aviation industry in India. He hopes to have a fleet of 70 aircrafts within four years to make a serious bid to lure customers from established players with his ultra low-cost carrier.

Although before the pandemic India was the fastest growing aviation market in the world, the restrictions on travel due to Covid-19 have drastically reduced the number of domestic flyers. While 1.3cr passengers flew in December 2019, the number dropped to just 31 lakh in June this year. The result is that most airlines are in the red and even before the second wave hit with fresh restrictions, ICRA had projected a combined loss of Rs 21000cr for Indian carriers, with Air India making up a major chunk.

So does a new airline make business sense at this juncture? It is being assumed that after the divestment of Air India (which the Tatas are strongly pipped to takeover), there will just be four serious players in Indigo, Air india, SpiceJet and GoFirst (again assuming that the Tatas will merge Vistara and Air Asia India with Air India). The revived Jet Airways, when it resumes operations, will initially be a small player. But when the restrictions are fully removed and people take to flying again, growth is being seen at pre-Covid levels or even higher. That explains why a new carrier is being planned by a canny investor like Jhunjhunwala.

But with Indigo having an awesome 55% of the domestic market share, Air India (after its expected acquisition by the Tatas) likely to make an aggressive bid to capture market share and the existing players like Spicejet and GoFirst holding on to their market share, any new airline will need deep pockets and innovative management to survive and make a mark. If a new airline is not able to corner a sizeable market share (say 15-20%) within a reasonable timeframe (say 3-4 years) and keep a tight leash on non-operational costs, it is not going to survive in the ultra competitive sector. But with Jhunjhunwala and Vinay Dube at the helm, it is going to be exciting to watch how things unfold for the venture.