It has been one year since the newest kid on the block Mumbai headquartered low-fare airline Akasa Airways took to the skies, not a bad time to take stock of how it’s faring.

From the time of the inception of the airline to its first year of flying, a lot has changed both on the ground and in the air. One of its primary funders with deep pockets, the late Rakesh Jhunjhunwala, is no longer available to support it, one of its direct rivals Go First has since declared bankruptcy and withdrawn flights while another rival SpiceJet has curtailed them. A third rival AirAsia India has since merged with Air India Express.

Besides these, the Indian market has shed the gloom cast by the COVID pandemic and Indians are travelling with a vengeance. Oil prices are giving airlines a breather and the rupee is standing its ground to some extent. The future is looking rosier than the past has proved to be.

To the airline’s advantage and credit, the fact that it started without any of the pandemic baggage helped it set the fastest pace of growth in the industry among the private players in a highly competitive scenario. It has grown to a fleet of 20 aircraft in its first year whereas India’s leading private airline IndiGo reached 12 in its first year. Despite the blessing and backing of the Tatas and the expertise of Tony Fernandes, AirAsia India over five years only managed to induct 17-18 odd aircraft and despite the Wadia name and support Go First took over five years to reach 20 aircraft. With its focussed growth plan in its first year, Akasa has a bigger market share than SpiceJet, an airline that has been around since 2005, as per the latest DGCA data.

Route selection has also been more thought out than most. It has not spread itself wildly thin with its 20 aircraft flying 900 weekly flights with 16 destinations so far but in fact has emulated IndiGo’s strategy of getting into a market, increasing frequencies to get to number 2 or 3 in this aspect and connecting the dots within the network rather than opening new stations with one or two flights. Again with dollops of experience behind it, industry observers and those vested will recall how AirAsia India managed to make quite a hash of this.

To cite an instance Akasa already has 7 daily flights from Mumbai to Bengaluru a day as does Vistara, both second to IndiGo which offers the highest. For the profile of regular fliers on this sector, this works best as a change in timings or an unexpected cancellation does not hamper travel. In the last 15 years or so, SpiceJet or Go First never got to the same number of frequencies in this sector.

Akasa also offers a no-frills, efficient service on board with clean and new aircraft, its on-time performance has been good and loads factors which were expectedly low in the first couple of months have picked up since. Since the start, the PLF has been 84% and the current financial year has seen a PLF of around 90 percent, the airline said in a response to questions sent by Fortune. It gets the job done with minimal to-do. By all anecdotal evidence so far, the feedback on service is rather positive. There may as yet be nothing to set apart an Akasa flight but there’s certainly nothing to complain about either.

Again taking a leaf out of IndiGo’s books, the management of the airline has kept a low profile and focussed on performance on the ground instead of the endless tom-toming one saw with AirAsia India’s initial CEOs who were often in the news, mostly for the wrong reasons! Readers following the sector may remember mug shots of Mithu Chandilya, the airline’s first CEO with detailed articles of his lofty plans across publications even as its fleet struggled to reach 5 airplanes! Needless to add, the plans never materialised either.

But this is where most of the happy news ends. Indian aviation has shown us that the right intentions and even a decent business acumen and sense don’t necessarily translate into a thriving business and to reach that elusive goal, a lot else has to fall in place.

As per newspaper reports, Akasa has quickly totted up substantial losses - around Rs 600 crore in the first year on a revenue of Rs 800 crore, numbers the airline declined to confirm. It, however, said that “the foundational year of any airline is dedicated to investing in its people, fleet, training, operating infrastructure and network and hence no airline registers P&L profits in these years”. It added that this was expected and has been factored in. Aircraft utilisation according to sources is in the range of ten hours a day, far behind IndiGo’s 13 and certainly lower than desirable although the airline founder and CEO Vinay Dube maintained that it was the “best in class and with the start of international operations hopes to be on a par with the best in the world. He also added that the airline was well capitalised and dismissed rumors of withdrawal of the financial support from the Jhunjhunwalas.

If its financial backing and position post the demise of its main funder has been a subject of debate, so has its ability to attract talent in the new aviation scenario in India with the formidable duopoly of Tatas and IndiGo dominating the market. Airline industry sources say that the airline has struggled to attract and recruit commanders and crew from almost the word go but after IndiGo started rehiring and Tatas have started luring crew, their struggle has deepened. As a former Jet captain argues, in the first phase only those who were absolutely desperate joined the carrier. Now, with the scenario changing, many prefer the tried and tested (read IndiGo) or those with deeper pockets (read Tatas). Last week, as was largely expected, the airline announced a sharp hike for its crew. The airline presently has 3000 employees, which is likely to go up by 500 by the end of March 2024 with a fleet of 26 planes.

While its crew and commander strength might be a challenge, its senior and top management team - which the airline calls Akasa’s Ex-Com, the executive management team of 9 members - has been labeled hefty from the word go with “far too much expertise available for its own good”, many argue. A former IndiGo management member is of the view that too many “chiefs” can often spoil the broth. “The moment you have a host of chiefs with no clear job demarcations you are basically entering dangerous territory”, he says, adding that Akasa is not entering dangerous territory, it started out in the danger zone: it launched with six co-founders which many feel is “one too many” given how things turned out for IndiGo with just two. Further, in contrast, when IndiGo started in 2004-05, the team was quite lean, with a small set of hands-on heads in charge of getting each key job done. On this aspect, the airline maintained that “it prides itself on having one of the most diverse aviation companies in the country” with an “employee-centric culture” and the lowest attrition rate.

But perhaps the biggest question facing the smaller players including Akasa and SpiceJet is how relevant can they stay in a market that is almost 90 percent cornered by the two biggies? Rapid fleet and route expansion - as has been seen in the past - is a double-edged sword: it works when the macro environment is in control and in the sector’s favor but can turn quite rapidly in the face of externalities. A war, an oil price spike, a rupee depreciation, and things can suddenly look quite grim. “A small tightly run ship can survive provided it proves to be nothing more than just a minor irritant to the bigger airlines as I see it. Some competition will be welcomed by the Tatas and IndiGo as it keeps the authorities off their back in matters like fares collusion, enough competition, etc,” says a former MOCA secretary.

Dube and team, however, remain quite bullish, arguing the sector is entering its golden age, with rising disposable incomes, especially in Tier 2 and Tier 3 India, a huge, untapped opportunity. The airline is not worried about carving a neat niche for itself and intends to place a three-digit aircraft order before the end of this calendar year to reaffirm this. Currently, it has 76 aircraft on order, of which 20 have already been inducted.

In the final analysis, the dilemma that faces the top management team of this newcomer remains existential and Shakespearan: "to be or not to be" and if the answer is the first, what exactly is it to be? Its wide collection of Ex-Com members, founders and co-founders might want to don Hamlet’s cap and ponder this to arrive at a clearer answer over the coming months.

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