By 2030, Akasa will be among 30 largest global airlines by fleet size; may grab 15% India market share in 5-7 years: Vinay Dube

Vinay Dube, Founder & CEO, Akasa Air, says given the small base, Akasa grew 300%, the previous financial year over 50%, this financial year. These kinds of numbers will continue for the next couple of years. The airline has ordered another 199 aircraft and with the existing fleet, there will be about 226 aircraft over the next seven years. Dube says by 2030, Akasa will be one of the 30 largest airlines in the world by aircraft count. The new airline also hopes to wrest 15% market share over next 5-7 years.

You have flown a lot of passengers during Kumbh. How many passengers did Akasa fly to Prayagraj directly and indirectly in and around Maha Kumbh, in that one month window?
Vinay Dube: I have not counted. All I can tell you is that we at Akasa and the airline industry hope we have a Maha Kumbh every month of every year. It was an amazing event for the country and the nation. It was fantastic for airlines. We added a lot of extra sections. And by the way, it is not just Prayagraj that saw an uptake, but it was Varanasi, Lucknow, Ayodhya – all of UP. In fact, even though they are geographically far away, our Gorakhpur flights also saw this amazing uptake. Everybody you talk to has been to Maha Kumbh. It was nothing short of a miracle.

How many Kumbh flights directly and indirectly were planned in that 40-day period?
Vinay Dube: Twenty round trips a day, so a thousand, something like that…

Thousand flights is what Akasa did in that one month.
Vinay Dube: Yes, something like that.

An average ticket?
Vinay Dube: Average ticket was affordable. Let us leave it at that.

What did Maha Kumbh do for the airline industry and not just for Akasa? Are we in for a bumper quarter for the airline industry because of Maha Kumbh?
Vinay Dube: I think yes. February for most airlines would have probably been even better than December. And December is the peak of the peak months like May. So, it was a spectacular February. But as excited as we are in terms of what February and January has done as a result of Maha Kumbh, obviously at Akasa, we are not a one quarter airline.We are planning our airline for the next three, five, eight years, and so as excited as we are, we have already moved on to the second quarter and the third quarter and the fourth quarter and that is where we are focusing.

The airline industry globally is a tough industry. There’s too much competition. Every two-three years somebody goes up, somebody goes down and very few stay up. But India is very different. Akasa is doing exceedingly well. SpiceJet has managed to bounce back. IndiGo has got enviable numbers. Air India is limping back into normalcy. Why is the Indian aviation sector right now growing and flying?
Vinay Dube: Let us separate the growth from the stability. Growth is very much a feature of India Inc. I mean everything in India will grow with the economy and so growth is a given in India and we will be growing for the next 30 years. India is also in its nascent stage as far as aviation is concerned and that is part of the reason why you have growth.

Now stability is altogether different. The stability that you are going to see over the next five to seven years is just a result of a maturing industry here in India. A lot of the ups and downs are a thing of the past and if you look at the US industry, they had nine airlines that were profitable for an entire decade. So, for ten years preceding COVID, nine airlines were profitable for ten years in a row.

In the US?
Vinay Dube: In the US. And because a lot of the bankruptcies that we here have had in India are mirroring what happened in other parts of the world and as you look at the maturity, you are going to see that we are going to have this golden age of aviation stability in India for the next ten years and it is very exciting to be part of that.India’s GDP growth is 6%. You added a nominal GDP, that is another 5%, that makes it 12%. Can I say because the airline industry is nascent 15% to 18% CAGR growth for the next three to five years is given?
Vinay Dube: I would not say given, but an expectation of 15% plus or minus is a very reasonable expectation in line with the economic growth and the nascency of the industry, absolutely.

Since you have a small base, can I add a couple of percentage points here and say for Akasa 25% plus is a probability?
Vinay Dube: I would say at least. Given our small base, we grew 300%, the previous financial year over 50%, this financial year you are going to see numbers like that for the next couple of years. So, I would say at least that, given our small base.

But if I could just throw in some numbers and again this is something which we know is in public domain, you have 27 aircraft right now. You have ordered 100.
Vinay Dube: We have ordered another 199, almost 200 more.

Oh, I lost count after 100. So, that is about 226 aircrafts coming in the next five years.
Vinay Dube: Yes, well we have got 27. So, 199 coming in the next seven years.

Seven years. How will that get added up every year? Is there a calendar you can share with us?
Vinay Dube: It is not a calendar, but I will say a couple of things just to give you a sense that as we cross 2030, Akasa will be one of the 30 largest airlines in the world by aircraft count.

In the world….
Vinay Dube: In the world.

Which is the largest airline in the world?
Vinay Dube: Today, it is United by aircraft….

How many aircraft?
Vinay Dube: They have got over 1,000 aircraft. We do not hope to get there, but in the next five to seven years, Akasa will be one of the 30 largest airlines in the world by aircraft count. Just to give you a sense of not just Akasa, but the excitement around aviation in India as a whole, it gives you a sense of the aircraft delivery. While I cannot give you a year by year number, I can tell you that the growth is going to be pretty spectacular and it is going to put us on the map in terms of global airline sizes.

The India market is still very sensitive to pricing and air travel is acceptable as long as it is affordable. What is the size of aircraft that Indian markets can digest? Could it be 2,000? Could it be 2,500? What is that number at which you would say it is healthy for the industry and it is great for the passenger?
Vinay Dube: I think it is much more than that. Five years ago, China had 3,500 commercial aircraft. Five or six years ago, the US had 7,500 commercial aircraft. So, for us hovering short of 1,000, we have maybe 700, 800. That number, given the geographical size of the country and the 1.4 billion population, there is no reason why we cannot work our way up to 6,000, 7,000 aircraft, which is what the US had several years ago.

So, it will take some time. In the next three to five years, we are not going to see 6,000 or 7,000 aircraft. But as a country, for us to have 6,000 or 7,000 commercial aircraft over the course of the next 20 or 30 years, is not out of the realm of possibility.

20 years is a really long time. In the next five years, how many aircrafts can the Indian aviation industry digest?
Vinay Dube: I think 1,500.

1,500 aircrafts…?
Vinay Dube: Yes, in the next five to seven years.

The total number of aircraft?
Vinay Dube: Yes.

So, 1,500 aircraft.
Vinay Dube: We have got 800, we will double, easily.

And the markets can digest it.
Vinay Dube: Absolutely.

They say the airports are getting choked. There is so much waiting, if you land in Mumbai, you have to keep on circling it. They say in Delhi also, the situation is pretty similar. Where will so many aircraft go?
Vinay Dube: Sometimes we do not give ourselves as Indians enough credit. In terms of circling, let me give you an interesting fact. If you look at the travel time between Atlanta and Washington DC in the 1960s, with the state of the 1960s aircraft that were reasonably slow, that travel time was faster than it is in the 2020s. Just to give you a sense. Part of that is air traffic congestion. So, I do not want us to think of India as some place that we are inept and we are the only country where aircrafts get on hold.

I am giving you statistics in the US comparing 1960 with 2020 and the travel time it takes, so that is sort of point number one. Point number two is that we have built something like 70 airports in the last several years and we are going to build another 100 in the next 7 to 10 years. So, the government’s focus on infrastructure is where the excitement lies. That gives us the ability to digest these 1,500 aircraft that I talked about. I am very excited about Navi Mumbai, very excited about Jewar, excited about the improvements that are made in Hyderabad and Goa and Chennai and a multitude of other airports around India. I do not think there is going to be any issue in terms of where our aircraft are going to be parked or flown to.

Akasa started with zero percent market share because you have just got incubated, not even five years. If you will have 250 aircraft in the course of the next five to seven years, assuming that we would have about 1,500 to 1,800 aircraft, you are looking at 15-20% market share in five years?
Vinay Dube: In five to seven years, that is entirely possible. Five to seven years for mid-double digit, 15% market share is entirely possible. But I will tell you something. One is we are not focused on market share. Market share is sort of inevitable because of our small base and our aircraft order that is linked to the growth that India is seeing. So, market share is an inevitability. I will tell you what we are focused on is the consumer experience. We are focused on steady, reliable, predictable growth for us, our shareholders, and most importantly, the consumers. We take great pride in our on-time performance.

We believe we are India’s most on-time airline. Since the DGCA started tracking our on-time performance, we believe that our consumer experience and the feedback that we are getting is second to none. I would hate for us to be put into a certain category of carriers. I would say if you compare our consumer experience to any airline in India, I would say we are right up there and so those are the things that we take great pride in. Market share will just come over time.

I have a personal question. Can I ask you?
Vinay Dube: Please.

Will Akasa be flying from the old terminal or the new Adani terminal when both the airports will start?
Vinay Dube: Both. Yes, absolutely. Absolutely both.

What will be changing for the city of Mumbai after the new terminal takes over?
Vinay Dube: It will make flying much easier and more accessible for a certain geographical area within Mumbai. We have done studies. For 70% of Mumbai’s population base approximately and this is going back to census data that is a few years old in Mumbai, which is divided into various geographical locations. But for 70% of Mumbai’s population, we estimate that the new airport is going to be as close or closer.

So, would you broadly be moving 50% plus of your current flights and new flights to the new terminal?
Vinay Dube: No, there will be no movement. We have got about 27 daily departures at the existing airport. The new airport is just going to see additions on top of that. We are not going to be moving from one to the other. Of course, terminal one will be shut down for some period of time, and so there will be some amount of capacity that will decrease between terminal one and terminal two at the current airport, but that is it. But otherwise, given the amount of planes we are getting, we do not need to reduce one to increase flying at the other. We have got plenty of aircraft to be parked in Navi Mumbai. We have got plenty of aircraft to be parked and flown in Jewar and many other airports around India. So, it is not a movement at all.

In the aviation industry, the dynamics at play are perhaps energy prices. One-third of the total cost is energy. Do you see that changing as efficiency kicks in, as more and more AI kicks in? Do you see that this whole change of aviation turbine fuel as a percentage of the total cost, come down dramatically because that could be a game changer.
Vinay Dube: Yes, it is hard to say and the reason it is hard to say is because obviously when Brent is at $40 a barrel versus $100 a barrel, that is a massive difference in terms of percentage of fuel costs relative to other costs. I will say though that we are building efficiency into every other aspect of the airline and that translates into ticket prices over time. This is one of the few prices across the world that if you look at a 20 or 30 year CAGR that we are below inflation, so we are very affordable when it comes to ticket prices as a whole.

I know at times people may not feel that and you look at the peak of peak, so we are talking about Maha Kumbh and certainly sometimes there are eye popping fares, but overall I would say we are an industry that has been below inflation due to the efficiency you talked about and that is something that will continue.