Akasa Air CEO Vinay Dube says without Covid he would never have thought of starting an airline. The pandemic resulted in a severe decline in aircraft rentals and easy availability of pilots, cabin crew and engineers. It also forced airlines to cut costs, allowing Akasa to utilize these delivery slots and reach a substantial fleet of 24 aircraft in 24 months.
“That was literally the only circumstance under which I was willing to start an airline. Getting the right property at the right price is part one, and getting enough of it was the other. Because fuel consumption, engine maintenance and aircraft leasing costs are about 70 percent of the airline’s costs and getting these right was a prerequisite,” Dube said in an interview with ET.
In these two years, Akasa has been able to make a mark on the Indian flying public. The brand new aircraft and onboard menu have received rave reviews. But now the climb uphill begins. In two years, it has lost over INR 2,400 crore.
Industry observers said this is mainly because the airline does not have a strong presence on monetized metro routes, while costs have soared as they hired pilots but can no longer use them as Boeing’s aircraft production is significant delayed due to increased scrutiny. from supervisors after multiple safety incidents.
But Dube says he is satisfied with what has been achieved. The losses, he says, are the result of gestation costs, as he and his team build a strong foundation for the future, driven by technology. At its headquarters in Mumbai, the company has set up an integrated operations control center – a central hub that coordinates daily operations, a training academy and is working on an AI solution for more efficient customer interactions. Despite all this, Dube says that the initial investment of around INR 250 crore made by the family of late stockbroker Rakesh Jhunjhunwala is intact. “Every start-up company loses money. But we have reached 25 aircraft, have 4,000 people in the company, signed two aircraft deals and long-term supplier agreements, made investments in technology and maintenance and still have the entire investment that was initially made in the bank. How many early-stage companies do that,” Dube said. Akasa aims to be profitable in the next three years and list on the stock exchange by 2028, he said.
Belson Coutinho, co-founder, says the airline is investing in technology to leverage its customers’ data so it can provide personalized service based on his likes and dislikes. “That will allow us to provide personalized service and increase the likelihood of brand loyalty.”
Praveen Iyer, co-founder and chief commercial officer, said the strategy of not densifying the metro lines and instead launching more destinations will make more money. “The leisure routes like Dehradun and Srinagar have been profitable for us and the international routes are also in high demand.” He said the airline is slowly increasing the number of planes and it has already taken almost 13 hours.
Investors are betting on Dube’s team. A consortium of family offices of Wipro’s Azim Premji and Ranjan Pai of Manipal Group are in talks to invest around $125 million. A person involved said investors like the management team but are also betting that a well-capitalized airline can be a strong third player behind IndiGo and Air India.
