Wednesday, August 04, 2021

New Indian Ultra-Low-Cost Airline Could Be a Boon For Boeing

US plane maker Boeing could get a chance to regain lost ground in India with billionaire Rakesh Jhunjhunwala announcing plans to launch new Indian ultra-low-cost airline.

Boeing’s Indian market standing was hurt by the fall of one of its biggest customers, Jet Airways, two years ago.

Jhunjhunwala, known as “India’s Warren Buffett” for his successful stock investments, plans to team up with the former CEOs of IndiGo, the country’s biggest carrier, and Jet Airways to tap into demand for domestic air travel.

While Jhunjhunwala’s proposed Akasa Air comes at a time when India’s aviation industry is reeling from the impact of the COVID pandemic, which has seen airlines losing billions of dollars, the sector’s long-term prospect makes it a hot market for plane makers Boeing and Airbus.

One industry source said the new venture was already moving towards what could be one of the biggest deals of the year outside the United States to acquire purchased or leased 737s.

For Boeing, this is a great opportunity to step in and up their game, considering they don’t have any other major operator for their 737 aircraft in India apart from SpiceJet.

Boeing did not comment on Akasa’s plans but said it always seeks opportunities and talks to current and potential customers about how it can best support their fleet and operational needs.

Jhunjhunwala, who is considering investing $35m and would own 40 percent of the carrier, expects to get a no-objection certificate from India’s aviation ministry in the next 15 days, he said. The ultra-low-cost airline’s team is looking at building a fleet of 70 180-passenger planes within four years, he said.

Akasa’s other cofounders are Aditya Ghosh, who spent a decade with IndiGo and was credited with its early success, and Vinay Dube, former CEO of Jet who has also worked with Delta.

Indian skies are dominated by low-cost carriers (LCCs) including IndiGo, SpiceJet, GoFirst and AirAsia India, the majority of them operating a fleet of Airbus narrow-body planes.

Boeing dominates India’s wide-body market of 51 planes but fare wars and high costs have led to casualties among full-service carriers, including Kingfisher Airlines in 2012 and Jet Airways in 2019, making LCCs and Airbus even more dominant.

04/08/21 Harry Johnson/eTurboNnews

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