Akasa Air, a low-cost airline promoted by former Jet Airways CEO Vinay Dube, has secured its no objection certificate (NOC) from the Ministry of Civil Aviation (MoCA), one of the major steps required before it can actually launch operations. The airline is backed by ace investor Rakesh Jhunjhunwala.
The company’s next step will involve applying to the Directorate General of Civil Aviation (DGCA) for its Air Operator’s Permit. That will be the final hurdle before it takes off. Sources said that the airline intends to start operations by summer of 2022.
The airline is in talks with US aerospace company Boeing for buying up to 100 737 Max aircraft.
Jhunjhunwala, in a television interview, had said the airline was looking to have 70 aircraft within the first five years of its operation. A narrowbody aircraft with dense seating of more than 185 seats is important to have a low-cost structure.
Sources said the airline intended to place bulk aircraft orders and scale up to at least 20 aircraft in the first year of operation.
A source pointed out that scaling up fast would be crucial as it’s important to have a certain scale in order to compete with incumbent players such as IndiGo.
Market leadership gives pricing power to control fares, which are suitable to the market leader and damaging to a new operator. This is an accepted practice across the world and IndiGo will follow it since it has the cash and capacity. Hence, scaling up has to be really fast.
Airbus Chief Commercial Officer Christian Scherer recently told news agency PTI that the company is in talks with Akasa for an aircraft procurement deal.
While promoter Vinay Dube will be the CEO, Praveen Iyer will be the Chief Commercial Officer. Iyer, a former colleague of Dubey at Jet Airways, is one of the founding members of the team along with Neelu Khatri who has been appointed as head of corporate affairs and was most recently president of Honeywell Business in India.The company hired Ankur Goel, former head of IndiGo’s treasury and investor relations, as its Chief Financial Officer.
While Jhunjhunwala has invested Rs 247.50 crore in the airline, another big name of Dalal Street, Madhav Bhatkuly, founder of investment fund New Horizon, has also invested around Rs 6 crore in the company.
Bhatkuly is known for identifying big companies at an early stage and was among the first institutional investors in many leading names of India Inc like Sun Pharma, Godrej Consumer, Axis Bank and Apollo Hospitals.
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