On August 1, India’s newest airline, Akasa Air, celebrated the addition of the 20th aircraft to its fleet. Although the induction was delayed by two months, it nevertheless marked a significant milestone in the airline’s remarkable year of growth, performance, service, and network expansion.
It was exactly a year ago that Akasa Air launched its first flight — between Mumbai and Ahmedabad. In the short time since, its trajectory of growth has been nothing short of impressive — 244 monthly flights at launch, surging to 633 flights in September and doubling to 1,155 flights in October. As of July, the airline operated 4,000 monthly flights, according to aviation analytics firm Cirium.
In February, Praveen Iyer, Co-founder and CCO of Akasa, had said the airline plans to operate 1,000 weekly flights; the number currently stands at 900.
Vinay Dube, Founder and CEO of the airline, told businessline, “We are extremely proud of the growth we have achieved over the last 12 months. Our network will continue to grow as our fleet increases, although there is no set formula for the increase in departures per aircraft.”
Back in February 2021, when businessline broke the story about two former Jet Airways top management executives — Dube and Iyer — starting an airline during the worst phase of the Covid crisis, industry experts were sceptical about their prospects.
However, barely a year and a half later, on August 7, Akasa soared to the skies. Quashing all scepticism, the newly minted airline managed to attract ace investor Rakesh Jhunjhunwala and his family, who pumped in $35 million for a 46 per cent stake. It also onboarded Aditya Ghosh, former president and whole-time director of IndiGo Airlines.
Launching during the pandemic provided Akasa Air with a valuable incubation period. On top of that, it benefited from the revenge travel demand, and the financial woes of SpiceJet and Go First. Despite incurring a loss of ₹602 crore, the airline generated operating revenues of ₹777 crore while running up an operating expense of ₹1,380 crore. Aviation industry experts view a daily loss of less than ₹3 crore in the first year as reasonable.
Akasa Air’s achievements go beyond fleet expansion and financial success. It excels with a consistent growth in passenger load factor and on-time performance for a record four consecutive months in 2023, as per Directorate General of Civil Aviation data.
Moreover, in just nine months of operation, Akasa Air carried over 4 million revenue passengers on its network of 35 unique routes, connecting 16 Indian cities including Bengaluru, Ahmedabad, Mumbai and Delhi. It has quickly captured a 4 per cent market share, surpassing low-cost carrier SpiceJet.
“Operations were launched in the midst of uncertain times; considering that backdrop, they have managed to deliver on most fronts, such as network coverage, measured growth, smooth operations,” says Jagannarayan Padmanabhan, Director of rating agency CRISIL.
The success story extends to customer satisfaction, too. Aloke Bajpai, Founder, and CEO of online travel portal ixigo, says customer reviews have been exceptionally positive. “We are very bullish with their growth. Even on airfares, they are competing very hard,” he added.
According to Cirium’s data, Akasa Air’s average airfare in May was $97, slightly higher than IndiGo’s $80 but lower than SpiceJet’s $106.
“The Indian airline market is arguably the most interesting in the world, and Akasa’s growth in such a short period has added to the excitement,” commented Mike Arnot, spokesman for Cirium. “Its competitors will have long taken notice.”
Sure enough, market leaders IndiGo and the Air India group of airlines are on a massive expansion spree with a pending order book of around 1,000 aircraft and fresh orders of over 470 aircraft.
An industry expert cautions that Akasa Air must keep a watch on pilot retention and its bottom line to avert air pockets in the mid-term.
Padmanabhan believes the airline will have to go in for aggressive network expansion to gain market share in the medium term and feed traffic for the international routes that they can soon become eligible to launch.
Akasa Air aims to raise $75-100 million in fresh equity, reports suggest, for pre-delivery payments for aircraft.
“We plan to have 26 aircraft by the end of this fiscal and 76 by March 2027. Alongside, we will announce a three-digit aircraft order in 2023,” Dube says.
Industry watchers will be on the lookout for these announcements and more from the newest kid on the tarmac.