Mint Explainer: Akasa Air and AI Express square off for No. 2 in Indian skies

Air India Express will have a fleet of 170 aircraft in five years.
Air India Express will have a fleet of 170 aircraft in five years.

Summary

  • Attracting and retaining pilot talent, especially captains, will be crucial as one airline expands while the other builds.

On Wednesday, the Tata Group completed a significant milestone under the transformation exercise of its umbrella airlines with the rebranding and new livery of Air India Express, which will be the primary face of the Tata Group airlines in the domestic segment.

The conglomerate also announced that Air India Express will have a fleet of 170 aircraft in five years. This is expected to increase the competition for the second spot in the domestic aviation market between Air India Express and another potential candidate Akasa Air. Mint delves deeper into the developments:

DOMESTIC RACE

The current Indian aviation landscape is nearly 80% dominated by low-cost carriers.

Government data for September showed that low-cost carrier IndiGo continues to be the largest player in the domestic segment with 63.4% market share, followed by full-service carriers Vistara at and Air India at 10% and 9.8% respectively, while other no-frills airlines secured the remaining share including AirAsia India at 6.7%, SpiceJet at 4.4%, and Akasa at 4.2%.

Air India, under the Tata ownership, is now clear that it wants to approach the domestic market with a low-cost product so the domestic network is expected to undergo an overhaul whereby, the Tata Group is planning to streamline operations among umbrella airlines such as AirAsia India, Air India Express, Vistara and Air India. This will enable focus of full-service carriers such as Vistara and Air India on international and metro routes while a low-cost product will be presented for majority of domestic flights.

"Domestically, it's quite clear that the market is most appropriate for low cost, which is why we have Air India Express... that will form the bulk of our domestic fly as well as some short haul international. It will be a low cost operation...low cost doesn't mean no service, it means service in a slightly different way," Air India Managing Director Campbell Wilson told Mint last month.

This filters the domestic competition to IndiGo, Air India Express, SpiceJet, and Akasa Air. IndiGo has been sitting comfortably on the domestic throne since 2012 and currently has a 63.4% market share, 330 aircraft and more than 950 aircraft on order. On the other hand, SpiceJet continues to face financial issues with a shrinking size as nearly 40% of its fleet is grounded, leaving the airline with a 4.4% domestic share as compared to over 15% pre-covid.

AIX VS AKASA

Air India Express and Akasa Air, both with hues of colour orange, are backed by strong promoter groups with the Tata Group supporting the former and Rare Enterprises of late billionaire investor Rakesh Jhunjhunwala with the latter. Akasa Air is also led by a team of industry veterans such as Vinay Dube and former IndiGo President Aditya Ghosh.

The merged entity of Air India Express and AirAsia India currently has 58 aircraft in its fleet and operates to 30 domestic and 14 international airports. Akasa Air connects 16 domestic destinations with a fleet of 20 aircraft and has plans to commence international flights by December.

Air India Express has set a target to achieve a fleet of 170 aircraft in five years. Akasa is expected to place a three-digit-order by December. If one assumes the number to be the lowest three-digit figure of 100, then this will take the orderbook of Akasa to at least 176 aircraft.

The latest data from DGCA for July shows that the merged entity of Air India Express and AirAsia India carried 901,471 domestic passengers while Akasa carried 624,086 flyers in the month.

FACE-OFF

Industry insiders are looking out for two key aspects in the race between Air India Express and Akasa, one is about the capacity expansion ability and the other is about the human resource. While Akasa and Air India Express have a long-term outlook of at least 170 aircraft, Air India Express will induct 50 of these by December 2024 or one aircraft every seven days. For Akasa, the rate of induction so far has been around one aircraft every 20 days on an average.

As both airlines operate Boeing 737 narrow-body aircraft, attracting and retaining pilot talent, especially captains, will be crucial as one airline expands while the other builds. Out of more than 650 aircraft across scheduled commercial passenger airlines in the country, only over 80 aircraft or nearly 13% of the Indian fleet are from the Boeing 737 narrow-body category, an aircraft operated by Akasa, Air India Express and SpiceJet.

Catch all the Industry News, Banking News and Updates on Live Mint. Download The Mint News App to get Daily Market Updates.
more

topics

MINT SPECIALS