2 min read.Updated: 12 Oct 2021, 05:34 AM ISTRhik Kundu
The airline venture will also see the return of former IndiGo president Aditya Ghosh
ULCCs often opt for unbundling of fares, making tickets cheaper than those of LCCs
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NEW DELHI :
Akasa Air, which is operated by SNV Aviation Pvt. Ltd and counts billionaire Rakesh Jhunjhunwala as one of its marquee investors, is slated to start operations from the summer of 2022, the airline said on Monday.
The airline venture will also see the return of former IndiGo president Aditya Ghosh, who along with Jhunjhunwala and former Jet Airways chief executive officer (CEO) Vinay Dube, are reported to be the co-founders of Akasa, which has received a no objection certificate (NOC) from the ministry of civil aviation (MoCA).
“We are extremely happy and grateful to the ministry of civil aviation for their support and for the grant of the NOC. We will continue to work with the regulatory authorities on all additional compliances required to successfully launch Akasa Air," Dube said.
“At Akasa Air, we believe having a robust air transportation system is critical for our nation’s progress. It is this belief that has motivated us to create a modern, efficient and quality conscious airline," Dube said.
Akasa Air plans to follow an ultra-low-cost carrier (ULCC) model in India’s highly competitive aviation market, which is dominated by InterGlobe Aviation Ltd’s IndiGo in the domestic sector.
An ULCC airline operates with a low-cost business model and has both lower unit costs and revenues compared to low-cost carriers (LCCs) and full-service carriers (FSCs).
ULCCs such as Ryanair and Spirit Airlines represent a business model that is different from the LCC model followed by IndiGo.
ULCCs often opt for unbundling of fares, making tickets cheaper than those of LCCs. Any extras such as baggage, selecting one’s seat or food are subject to a charge.
These airlines also typically have cheaper operating costs as they operate out of secondary airports and have lower distribution costs.
However, though the ULCC model has worked well in Europe and the US, the inherent high-cost structure for operating airlines in India could erode any competitive advantage that Akasa Air may hope to achieve.
“Moreover, Akasa Air will serve all Indians regardless of their socioeconomic or cultural backgrounds with warmth, inclusiveness and respect, because at the end of the day, it is these qualities that connect people and cultures and help Indians realize their dreams," Dube said.
Jet Airways (India) Ltd is expected to restart operations during 2022 under new owners, a consortium consisting of UAE-based investor Murari Lal Jalan and UK-based Kalrock Capital.
However, the revival of the airline, which has been grounded since April 2019, depends on the outcome of various litigations it is facing and the airline’s ability to negotiate on slots at key airports such as Mumbai and New Delhi that the airline held before going bankrupt.
According to estimates by aviation consultancy Capa India, Indian airlines are likely to suffer a consolidated loss of about $4.1 billion during financial year 2022, similar to the losses in FY21, due to the covid-19 pandemic.
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