Monday, July 04, 2022

India's newest airline targets smaller cities as route to profit

India's newest airline plans to launch into the nation's crowded skies later this month, aiming to chart a course to profit by serving destinations not widely covered by its bigger rivals.

Low-cost carrier Akasa Air's strategy of flying its nascent fleet of Boeing 737 Max jets from the country's largest cities to smaller places comes as competitors such as Indigo, Air India and SpiceJet vie for dominance in the busier, cutthroat routes connecting big destinations.

And, with India poised to become the third-largest aviation market globally by 2025, the stakes are high.

"If you look at Mumbai to Delhi, there will be perhaps five carriers with, say, 35 daily round trips [when traffic returns to] pre-COVID [levels], and it doesn't make sense for us to become the 36th," Akasa CEO Vinay Dube told Nikkei Asia in an interview in late June. "We will have some metro-to-metro flying, but that isn't going to be a hyperfocus of ours."

Research firm CEIC estimates the airports at India's so-called metropolitan cities of Mumbai, Delhi, Chennai and Kolkata, coupled with technology hubs Hyderabad and Bengaluru, clocked footfall of nearly 16 million people in May -- that is just under 60% of the country's total air passenger traffic.

Akasa ordered 72 aircraft from Boeing in November, to be delivered over five years. It expects to have 18 planes by the end of the current financial year but will initially start flying with just two. It aims to travel to foreign destinations, including Southeast Asia, Nepal and Bangladesh, from the second half of next year.

04/07/22 Syan Chakraborty/Nikkei Asia

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