I am pretty sure that you may have heard of India’s newest Startup airline, Akasa Air. It’s been in the news for several weeks now. The latest update of the airline is that it is looking to buy up to 100 Boeing B737MAXs. The airline is backed by investor Rakesh Jhunjhunwala and is planning to be a Ultra Low-Cost Carrier (ULCC).
Akasa Air is a new Indian Startup airline backed by Rakesh Jhunjhunwala, who will take a 40% stake in the airline for $35 million, giving the startup airline a valuation of $87.5 million. The carrier plans to operate 70 aircraft in the next four years, making it one of the top five airlines in India.
Clearly, the airline is having ambitious plans to grow quickly and compete with rival carriers such as Indigo, SpiceJet and GoFirst. The airline will be run by industry veterans – Aditya Ghosh (former CEO of IndiGo) and Vinay Dube (former CEO of Jet Airways and GoAir).
Up to 100 B737MAXs
According to Moneycontrol, Akasa Air is negotiations with Boeing to secure the B737MAX for its narrowbody fleet. The airline could order up to 100 aircrafts of the type. Akasa first revealed plans that it is looking to buy a 180-seater jet for its ultra-low-cost operations. However, betting on the B737MAX is a huge move by the carrier.
Indigo (the market leader in India with a market share of over 50%), Vistara, GoFirst, Air India and Air Asia India all operate Airbus A320 family aircraft for their domestic operations. It looks like Akasa Air wants to break this chain and go for a different aircraft type. Another reason could be that Airbus A320 is a high-demand aircraft and securing A320s in such a less time would be a challenge. As another ultra-low-cost carrier, it will need to truly have a low-cost base to succeed. And the B737MAX might be the perfect aircraft to achieve this.
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Boeing’s chance of comeback in the Indian market
If Akasa Air order the B737MAX, it might become a change of Boeing’s comeback in India. The collapse of Jet Airways in 2019 meant the manufacturer saw tens of B737s and billions of dollars in orders wiped out overnight. In addition to this, the grounding of the B737MAX had already meant SpiceJet and Jet Airways were not taking new deliveries, further reducing Boeing’s market share.
Meanwhile, Airbus has been on a roll in India. As aforementioned, the European giant supplies aircraft to Vistara, Indigo, GoFirst, Air India and Air Asia India. While Boeing’s customers face financial struggles, Airbus has seen its India deliveries and order book only rise in the last five years. For Boeing to succeed, it needs a big splash back into India.
A new order from Akasa Air could be the spark Boeing needs to gain a foothold in India again. The discussion is already yielding results, with one source close to the airline saying:
The company (Akasa) in its discussions with regulators has said it has made significant progress in negotiations with Boeing to acquire the 737 MAX and intends to start operation by early 2022. For that purpose, the government needs to recertify the aircraft.
Moreover, Akasa will negotiate much lower prices for the beleaguered B737MAX, which has been grounded for over two years in India and has not yet been recertified in India. This will be a win-win situation for both Boeing and Akasa, boosting their presence in India. While Airbus is the safer choice, Akasa could be looking to break the status quo to make its presence felt.
Featured image by Boeing
What do you think of Akasa Air’s plans to buy up to Boeing B737MAXs? Let me know in the comments section below.