The Indian aviation sector was facing huge turbulence since the pandemic. It includes sky-high prices of tickets, flight delays, insolvency cases of affordable airlines, etc. Although flights save considerable traveling time, ticket prices are still out of the budget of the majority of Indians. Thankfully, some affordable & low-cost airlines like Indigo and SpiceJet have given wings to Indians with their pocket-friendly tickets. Another airline that joined this league is Akasa Airlines!
Akasa Air, a brand of SNV Aviation Private Limited is a low-cost airline in India. It aims to provide affordable fares as one of its key selling points. As a newcomer in the Indian airline industry, it differentiates itself from established airlines like Indigo, Spice Jet, and Jet Airways.
How? You may ask.
By establishing an independent ultra-low-cost carrier!
Well, that’s not all. Akasa Airlines has a lot more in its planning and strategic development. Curious to know?
Go through this write-up to know everything about Akasa Airlines- India’s cheapest airline!
Akasa Airline: A Brief Overview
Let’s have a brief overview of the company-
|Name of the Company||Akasa Air|
|Parent Company||SNV Aviation Pvt. Ltd|
|Operating Segment||Aviation Industry|
|Founded in||December 2021|
|Commenced Operations||7th August 2022|
|Founders||Vinay Dube (CEO) and Aditya Ghosh|
|Headquarters||Mumbai (Maharashtra, India)|
|Number of Destinations||16|
|Type of Flights||Domestic Flights|
History of Akasa Airlines
Akasa Air was established with the objective to provide low-cost and affordable but comfortable flights to Indians. It was founded by mainly two individuals namely- Vinay Dube and Aditya Ghosh. But can you begin an airline company in India that easily? Obviously not! Then how did those two people establish a stable airline and that too with low ticket pricing? See, to open an airline company you need proper investment and funding.
And here the funding was done by the famous investor “Rakesh Jhunjhunwala.” And thus, he held a 46% stake in the airline. Apart from low ticket prices, Akasa Airline got famous for being backed by Mr. Rakesh Jhunjhunwala.
It commenced its first flight on 7th August 2022 from Mumbai to Ahmedabad. Can you guess the first aircraft of Akasa Airline?
It’s a Boeing 737 MAX 8 aircraft!
It can carry 162 passengers on a 5,600 km flight. Also, it is projected to have 1.8% better fuel burn than a blended winglet-equipped aircraft. It delivers outstanding economics and produces 50% less noise and pollutants. Also, it offers 14% cheaper airframe maintenance costs. We will cover it in detail in the upcoming sections.
Shareholding Pattern of Akasa Airlines
The most common query of folks is- “Who is the owner of Akasa Airlines.” The answer is its shareholders. Akasa Airlines has not one but three owners namely- Rakesh Jhunjhunwala, Vinay Dube, and Aditya Ghosh.
As you have read above, the major investment in the company was done by Rakesh Jhunjhunwala. He funded $35 million (Rs.287 crore) and the rest of the funding was done by the founders.
|Shareholders||Percentage of Stake Owned|
Akasa Airlines Routes
The following image will give you clear info about Akasa Airline routes and networks.
Its network includes almost all the major cities of India viz.-
You may question- “Does Akasa Airlines fly internationally?” The answer for now is “No, it doesn’t fly internationally.” Because it currently operates in 16 destinations within India.
Why is Akasa Airlines Cheap?
As you know, Akasa operates as an LCC i.e. Low-cost carrier. Look at the ticket prices of Akasa Airlines and Vistara for the route Ahmedabad to Bengaluru on the same date.
If you compare the price of Akasa with any other airline, you will find that the former is more affordable. Here, the question comes- Why is Akasa Air so cheap? Where does the cost-cutting occur?
Akasa manages the costs in the following ways-
1. Going for Boeing 737 Max 8 instead of Airbus A320 neo
The first and prime reason for the low cost of Akasa Airlines is its choice of airplane. As you have read above, it uses Boeing 737 Max 8 whereas its competitors use Airbus A320 Neo. So what’s the difference between the two? The key difference is the safety feature. Boeing 737 Max 8 wasn’t used much by aviation companies due to its technical issues. Also, it was a grounded airplane.
But Akasa outsmarted its competitors by fixing the underlying issues of the Boeing 737 Max 8 aircraft. Boeing offered alluring and significant discounts to Akasa so that the former can reclaim the market share it lost to Airbus.
Therefore, the Boeing-Akasa deal was beneficial for both parties. Boeing Max 8 of Akasa is expected to have approx.190 seats equipped with USB ports for every seat. The airline company has placed an order for 72 Boeing airplanes that will be delivered by 2027.
Thus, Akasa Airlines saved a huge chunk of money by purchasing the Boeing aircraft at alluring discounts.
2. Using less-crowded Routes
Ever since its launch, Akasa always focused on less-crowded routes that connected large and smaller cities. For example- Mumbai to Varanasi or Guwahati to Bagdogra. So how does it save the costs of the airline? See, here is a simple concept. The less crowded your routes are, the less you have to pay. It operates in metro-to-metro routes too (connecting large cities). But metro to non-metro cities routes have proven to be more beneficial for the airline.
3. In-Flight Meals
When it comes to meals, customers prefer to pre-book the meals rather than purchasing the meals in flight. Reason? Due to the expensive in-flight meals of most of the airlines. Here is the plot twist! The in-flight meals of Akasa Airlines are cheaper than the pre-booked meals. This feature helps the customer to get affordable in-flight meals. Simultaneously, Akasa earns a significant amount of revenue through food!
4. No expenses on advertisements and promotions
Usually, newly launched companies spend heavily on advertisements to come to the notice of the audience who later become customers. But that’s not the case with Akasa. Its marketing was mainly done by the following two factors-
- Cheap/Affordable price of tickets
- Backed by Indian billionaire Late Mr. Rakesh Jhunjhunwala
These two features have aided in the word-of-mouth marketing of Akasa Airlines by increasing its popularity. Thus, Akasa didn’t have to spend too much on ads and promotions.
What is the Weakness of Akasa Airlines?
Just like any other newcomer in any industry, Akasa Airlines has several weaknesses too! Some of the major ones are-
1. Catching up with larger airlines
Being a newcomer, Akasa Air started its operations from scratch. Although it has done brilliant and cost-effective management. But still, it may take years to become competent enough to compete with larger airlines.
2. Heavy discounts on tickets by rivals
As you have seen above, the affordable prices of tickets are one of the greatest strengths of Akasa Air. This strength may fade away if its rivals offer tickets at extremely low prices through discounts. Although this will be a temporary challenge because the discounts of the rivals won’t be perennial. But it can significantly affect the income of Akasa Airlines and may snatch the tag of “India’s cheapest airline.”
3. Lack of International Flights
Aviation companies gain over half of their revenue through international flights. Not only in terms of money but in terms of customers too! The lack of international flights is a weakness of domestic airlines. But as per the officials of Akasa Airlines, it will begin international flights soon.
4. Rise in ATF Prices
As you know, Aviation Turbine Fuel (ATF) prices come down once in a blue moon. It constitutes around 25-40% of the operational cost of the airlines. Do you know that ATF had reached the sky in the last 3 years? As per the data provided by Indian Oil Corporation (IOC), our largest fuel retailer, the price of jet fuels is Rs.89,303.09 per kiloliter. If you compare it with that of March 2020 and June 2019, you will notice that the current price is higher by 57% and 37.4% respectively. This can act as a major hindrance for Akasa Airlines to operate at low costs.
Note: We have explained the rise in ticket prices in India. For detailed info, you can look into our article-“Why are flight ticket prices getting expensive in India?”
Akasa Air, the young airline of India has gained significant appreciation from the public. It increased its fleet from 0 to 20 aircraft within the first year of operation. Thus, it became the first airline in the global aviation industry to achieve this sort of success. Akasa Air is planning to include 72 airplanes by March 2027.
Not just that, but it has also increased its market share from 0.2% to 4.8% in the last year by flying over 6 lakh passengers in a single month. Although it is very less as compared to larger players like Indigo and Air India. But Akasa Air’s growth is remarkable because it is hardly 2 years old.
With its strong management system and operation strategies, it offers tickets at extremely affordable prices. This feature makes it superior to its competitors.
Thus, Akasa Airlines is spirited with long-haul dreams!