Airfares can rise further while still being affordable: Akasa Air CEO

Airfares in India are still among the lowest in the world, giving Indian carriers significant headroom to increase them while ensuring they remain affordable, Akasa Air Founder and CEO Vinay Dube said during an interview with Business Standard.

When asked if Akasa Air plans to follow IndiGo, which recently announced it would be introducing business class in its planes, he replied, “For the moment, no. Will we have a particular type of seat for 8-10 customers? No.”

Moreover, he challenged the characterisation of airlines as solely “low-cost” or “full-service”.

“I do not believe it is such a binary state. Akasa today is India’s most on-time airline. That, to me, is the highest level of service we could provide to our consumers. So why would you not consider us to be a full-service carrier already?” he asked.

A full-service airline typically offers a range of amenities and services beyond just transportation from one place to another. These may include things like free meals and snacks during the flight, a wider choice of seat options including business or first class, more legroom, in-flight entertainment systems, and sometimes even amenities like blankets, pillows, and toiletry kits. 

Dube said, “We offer the best legroom in the industry. We believe we have the finest food offerings. Our aircraft are brand new, boasting the lowest levels of noise and the cleanest air circulation. The pressurization in these modern-generation aircraft is superior to the older generation aircraft flown by some of our competitors. Our cabin crew service is second to none. These are all the attributes of a full-service carrier.”

Akasa Air, which launched its first commercial flight in August 2022, placed an order for 150 B737 Max aircraft with American planemaker Boeing in January. Consequently, the airline has a total order of 226 Max planes from Boeing.

To date, Boeing has delivered 24 out of the 226 planes ordered. In the financial year 2022-23, the airline received 19 planes, followed by five planes in 2023-24. According to aviation consultancy firm CAPA India, Akasa Air is scheduled to receive six planes from Boeing in 2024-25.

Dube said, “Aircraft deliveries are happening largely as per our expectation. We expect them to continue...At Akasa, delivery of one more or one less plane does not bother us because either way, we are growing at a pace that no other airline in the history of global aviation has ever done.”

When asked if Akasa Air might be squeezed out by the two big players, Air India Group and IndiGo, which now own more than 80 per cent of the domestic passenger market share, he replied, “Absolutely not. Our success does not hinge on one of the bigger players suffering. Forget three airlines, India can support more than three profitable, strong carriers over the long term. I see us as a force to be reckoned with. There is nothing that can realistically create impediments for us.”

“I think India still has some of the lowest airfares that you see anywhere in the world. We have lots of room for airfares to grow while still being extremely affordable for the Indian consumer,” he noted.

He mentioned that it will take some time for Akasa Air to break even. The company has set internal milestones with specific timelines to achieve net profitability.

“Financially, we are ahead of our plan. This is partly due to our hard work and partly due to the growth we see in the market,” he added.

The shortage of pilots, cabin crew members, and other key aviation sector employees is far more serious than estimated or visible right now, CAPA India had said last week.

Dube said the company has hundreds of people in leadership positions, even at the level of managers and general managers, who have in-depth understanding of the aviation sector and this allows the airline to plan for a workforce increase ten years in advance. 

“We currently do that in detail that perhaps no other airline is planning. Consequently, in Akasa Air, there is no shortage of employees in any of the aforementioned categories,” he added.