Let the battle begin! – Akasa Air takes to the skies today

In 2014, I had written an article with a similar title when AirAsia India took to the air. Eight years later, I want to use the same title as Akasa Air makes its maiden commercial flight today. A new airline in the country is a treat for network planning analysts like me. It gives an opportunity to learn, get vindicated, cross check the data analysis you have been doing from outside the industry and get course corrected. 

There is a vast difference between AirAsia India’s foray and that of Akasa Air and that is where I feel the battle will be cut throat and tit for tat. AirAsia India turned out to be a loud mouthed airline with little on ground. Starting with the first CEO and group head making tall claims about profitability in one year to never being profitable till date, AirAsia India was more about hot air. With AirAsia Bhd. appointed top management not being able to understand the Indian conditions to multiple cases against the airline, things din’t quite really work out. But make no mistake, Akasa Air by no means is another AirAsia and IndiGo for sure knows this.

What will stand out for Akasa Air?

IndiGo literally chased AirAsia India out of many markets. To do that, IndiGo picked up a leaf from AirAsia’s book! But as Akasa Air starts, there is a likelihood that Akasa will pick up a leaf from IndiGo’s book to take on IndiGo! But how does it stand out?

Akasa Air announced flights between Bengaluru – Kochi and Mumbai – Ahmedabad in the first tranche. IndiGo quickly matched it. The second one saw flights being added on the Mumbai – Bengaluru sector. There has been another announcement which saw the airline announce flights on Bengaluru – Ahmedabad sector and launch of Chennai as its fifth destination with flights from Mumbai. IndiGo has already added flights on the Bengaluru – Ahmedabad sector. 

The pattern of Akasa Air announcements is remarkably different from what AirAsia India did. AirAsia India announced one rotation at a time even as it claimed that it wanted to add multiple aircraft and go international. Akasa Air on the other hand has a steady stream of aircraft lined up, which will give a small income from Sale and Leaseback transaction (SLB) and ensure that it can keep up the momentum in terms of capacity – which nobody so far has done.

In the end what makes money for the airline is not responding to “6E” (Sexy) code with “I5” (High Five) but by having enough fare paying passengers on its seat and helping cover the costs or reach closer to the costs. An airline gets fare paying passengers if it’s expanding, is on-time and reliable and has its basics right or if it’s a monopoly. Until the next round of RCS-UDAN bidding is done, Akasa may not have an opportunity to be a monopoly on any route but it may get other things right.

Akasa Air is top heavy. A lot of CXOs and co-founders to begin with. Does it also translate to high costs? The answer is not known just yet but we would soon. All the top management comes with experience in Indian skies and that will make a big difference going forward. 

The airline wants to induct 72 aircraft in five years. This would by far be the fastest induction for any airline in the country and that is what is likely to hit competition harder. For example, Vistara crossed the 50 plane mark earlier this year, seven years since starting. AirAsia India has been hovering around 30 planes, eight years after starting services. Go FIRST is a sixteen year old airline but has not crossed the 60 aircraft mark. SpiceJet had 100+ planes at one point but is now down to somewhere in the 80s. A good rate of induction means there is momentum in the market to take on the market leader.

When AirAsia India entered the market, IndiGo literally pulled out a rotation to start another one to take on the airline. Times are different now and IndiGo has a steady flow of aircraft coming in. It may have to do far fewer changes to compete with competition. Other airlines also went on a capacity addition spree and it was in fact the push from Jet Airways which led to AirAsia India vacating its first route of Bengaluru – Chennai.

Network Thoughts

What is Akasa Air’s strategy? The market announcements right now seem to indicate that it is confusing the competition. Instead of announcing one rotation, it is announcing flights in bits and pieces. Only way to understand how it could potentially work is with flight numbers since it seems to have a clear flight number range for Mumbai base and Bengaluru base. 

Competition from IndiGo is a given but is the airline trying to hit the number two or number three in the market? Vistara has aged and AirAsia India will soon merge, leaving Go FIRST and SpiceJet which will be at the receiving end of this barrage of flights from Akasa Air and competition. However, Akasa will have to pull up its socks. The first day misses cannot be a common occurrence.

The picture will be clear by December on how much of a dent has Akasa Air been able to make on others. Until then if you have the best seat like me which is the fence then you should enjoy the competition and hope that Akasa Air starts flights to your city because as anyone would have observed the fares on routes where Akasa has started have seen a sudden drop unlike the current high fare regime in the country!

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8 thoughts on “Let the battle begin! – Akasa Air takes to the skies today

  1. This is a brilliant article! I absolutely enjoyed reading it. It touches upon so many things and makes the reader think
    Effortless flow of thought
    Many thanks and keep writing

    Like

  2. Simply superb. I was wondering why this airline is not announcing flights in one go but after rrading your article I understand that it is part of the strategy and what a fantastic one

    Like

  3. Most airlines usually enter the market with a bang.. However the Darwin’s theory on survival is tested in subsequent years based on aircraft employee ratio, cost per seat per km n revenues PSPK, routes optimisation, On time performance and the most crucial one customer experience. Today’s market leader has ticked all boxes right and has carved a path. How new entrants fare would be an interesting watch. Needless to say that customer are going to have a Smile.

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  4. “Akasa Air on the other hand has a steady stream of aircraft lined up, which will give a small income from Sale and Leaseback transaction (SLB) and ensure that it can keep up the momentum in terms of capacity – which nobody so far has done.”

    Superb insight from above, and nice to have your overall perspective in this article. Akasa succeeding will be good for India.

    Rakesh Jhunjhunwala was the main person who provided funding for Akasa. With his passing, will his successors continue to fund a capital intensive high risk venture?

    Like

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