Richard Branson, a British businessman had once said, “If you want to be a millionaire, start with a billion dollars and then start (buy) an airline!” But some sharp Indian business minds are showing how the airline business can be operated to mint big profits.
Sharp business minds revolutionising India’s airline industry
First, Tata Sons purchased Air India after the public sector undertaking (PSU) struggled for several years. Now, Tata Sons is expected to turn Air India around and revive the glorious airline which was once a symbol of “graciousness and high living.” On the other hand, ace investor Rakesh Jhunjhunwala is planning something really big for the Indian aviation industry.
Rakesh Jhunjhunwala’s big take-off
Known as the “Warren Buffett of India” and the “King of Bull Market”, Jhunjhunwala plans to launch an ultra-low-cost airline Akasa Air. Jhunjhunwala’s plans are likely to resurrect the aviation market by enabling highly affordable air travel and setting off the impact of heavy losses in the aviation industry due to the Covid-19 Pandemic.
Jhunjhunwala’s airline plans have already got a shot in the arm even as Akasa Air was given a no-objection certificate (NOC) by the government. As a part of his aviation plans, Jhunjhunwala is relying on aircraft manufacturer Boeing’s intention to regain its hold on the vast Indian aviation market.
Jhunjhunwala to rely on competitive lease rates
Boeing had lost ground in the Indian airline industry after the fall of Jet Airways- one of Boeing’s biggest consumers in India, two years ago. In fact, as per data from consultancy CAPA India, Boeing’s share of 570 narrow-body planes that accounted for 35% share in the Indian market as of 2018 fell to 18%.
With Akasa Air’s plans to buy 70 Boeing jets worth $8.5 billion, the US-based aircraft manufacturer is likely to make considerable gains. This could end up helping both Boeing and the Jhunjhunwala-backed airline.
Nitin Sarin, managing partner at law firm Sarin & Co, which advises airlines and lessors said, “If you have to lease an aircraft there is an abundance and lessors would be happy to provide competitive rates, even better than pre-COVID times.” This is exactly why Jhunjhunwala seems willing to launch an airline at this juncture.
Jhunjhunwala mobilises a brilliant team to lead Akasa Air
Rakesh Jhunjhunwala is an ace stock investor and also possesses a brilliant business mind. With his stock market investments, he has amassed a net worth of $5.7 billion. For his airline, Jhunjhunwala has mobilised a team of industry veterans including former Jet Airways CEO Vinay Dube and former president of Indigo, Aditya Ghosh.
Dube himself has roped in many of his former colleagues from Jet Airways and GoAir, where he had served as the CEO. Industry sources say that Jhunjhunwala can develop an airline on a low-cost model with a definitive advantage over financially weaker rivals.
Jhunjhunwala has played it very smart. He waited for the Pandemic to get weakened and then invested in an airline when the air traffic started going up, aircraft lease rates went down and pilots/ crew availability started improving. Banking on such favourable market conditions, Jhunjhunwala plans to launch an impressive airline with really low prices to revolutionise air travel.
With low costs and a travel-hungry middle class in the country, Jhunjhunwala will enable affordable air travel and position Akasa Air as a leading carrier in low-cost travel.
