Akasa Airlines, backed by billionaire Rakesh Jhunjhunwala is the latest entrant in Indian skies. Akasa has started operations at a time when competition is quite intense among Indian carriers as they are in a recovery phase post-COVID-19. Akasa Air’s future strategy will be to start operations from tier-2 and tier-3 cities and avoid highly competitive metro routes.
Akasa Air’s maiden flight from Mumbai to Ahmedabad marked the entry of a new airline operator into India’s increasingly competitive aviation sector. They are planning to scale up to a fleet of 20 aircraft within 18-20 months of launching commercial operations.
Akasa Airlines is expected to put up a strong fight in sectors where it launches operations as they have good finances & great management team. It is estimated that Akasa should be able to capture around 4 percent market share in the next few years. Akasa will be able to leverage the benefits of scale, amortize costs, and set up operations to fly internationally. Airlines’ pricing strategy is lower than other airlines in the time slot they are operating as of now. Hence, it should help them achieve a better load factor at the start itself.
USP OF AKASA AIRLINES
-
- Akasa Air aims to offer customers a new experience of flying with a budget airline. They do this by emphasizing positivity and empathy in their customer service.
- Akasa Air plans to service India with Low-cost carrier flights, outpricing the rest of the market and making air travel accessible to everyone.
- Hence, one of the major advantages for Akasa would be Competitive aircraft costs.
- Akasa airlines have entered a market where existing players are struggling financially. Akasa’s strategy is to take advantage of the weakness of the other airlines.
- Akasa’s fares on current routes like Mumbai-Ahmedabad are relatively lower compared to other players operating on the same route.It is lower than other airlines in the time slot they are operating as of now, which should help them achieve a better load factor at the start itself.
-
- There are a few things that differentiate Akasa from other Airlines. They have gone for Boeing 737 Max 8, rather than going with the usual Airbus A320neo that its competitors use. Boeing 737 Max Range is the most fuel-efficient flight which lowers the per seat-mile cost.
- In the airline sector, the operator with the lowest cost structure wins, and fuel efficiency helps control costs.
- Currently, Akasa’s capacity is too small on most routes to create a strong impact on existing players. However, it could become a formidable player in the sector with some other airlines reducing the number of flights on several routes and Akasa’s plan to scale up its operations.
- Akasa Air promises sustainability, great customer service, and affordable prices.
- With 72 planes on order, which are expected to be complete by March 2023, they’ve come prepared to offer travel services around India.
MAJOR CONCERNS OF AKASA AIR
Akasa’s future journey won’t be easy despite low expenses and incoming funds. India has one of the world’s most competitive aviation marketplaces. Even the slightest shift in any component, like fuel prices, can hamper the entire business operations. It will affect profits and lower the margins.
Some of the major concerns for Akasa airlines are Unconstrained capacity, fare wars, and structural challenges, especially the high cost of jet fuel. It will also face a challenge with prime slots at metro airports in the near term.
There is a minimum scope of mistakes for new competitors because airlines are competitive with their market shares and routes.
Akasa Air has to avoid the debt traps that have brought down airlines like Jet Airways and Kingfisher. It has also put Airlines like SpiceJet, on the verge of bankruptcy by choosing a more deliberate development over a hasty one.
Fixed expenses, including lease, parking, maintenance, and employee wages, account for 40% of an airline’s cost structure. Hence, Akasa Air needs to get the right mix of these to succeed.
CONCLUSION
The airline’s ambitions are sky-high, however, a number of factors will decide how high it soars in the Indian aviation market. Some fault in the strategy has led to the failure of many airlines and tycoons in the past. The kind of planes it flies and the hub it chooses will play a role in determining success or failure.
Will Akasa airlines Disrupt the Indian Aviation Market?
Formidable and well-known players are leading the market right now. Profitability in the airline sector has never been guaranteed and will depend on how Akasa succeeds, and how other airlines react.