Billionaire investor Rakesh Jhunjhunwala-led low-cost airline Akasa Air has placed an order for 72 Boeing 737 MAX jets to launch its operations.
Akasa Air had said last month it expects to start flying next year after getting initial clearance from the civil aviation ministry.
For Boeing this comes as a big opportunity to gain market share as it does not have any other major operator for its narrowbody 737 aircraft in India apart from SpiceJet.
The Directorate General of Civil Aviation had in August allowed the country's airlines to fly the Boeing MAX jet which had been grounded worldwide for nearly two-and-a-half-years after two planes had crashed in quick succession due to the same software failure.
The disastrous crashes had taken place in five months killing 346 people, plunging Boeing into a major crisis. However, the modified 737 MAX has now been cleared to fly again in 175 countries including the USA and Europe Union.
While Jhunjhunwala's plan to launch Akasa Air comes at a time when airlines are piling up losses due to the crippling effect of the coronavirus pandemic, it is the aviation sector's long-term prospect that he appears to be focused on. He will also be looking at sourcing planes at a low price due to the recession in the industry.
Jhunjhunwala is referred to as the “Warren Buffet of India” because of his successful stock market investments and is valued at $4.6 billion by Forbes.
Details of the Akasa venture have not been fully disclosed, but Jhunjhunwala told Bloomberg he plans to have a 40% stake in the low-cost airline, which will have 70 aircraft of up to 180 seats within four years.
Akasa's other co-founders are Aditya Ghosh, who has worked with IndiGo and played a key role in the airline’s early success, and Vinay Dube, a former CEO of Jet who has also worked with Delta.
Indian commercial airlines are dominated by low-cost carriers including IndiGo, SpiceJet, GoFirst and AirAsia India, with the majority of them operating a fleet of Airbus's narrowbody planes.
These airlines also have over 900 planes on order of which 710 are Airbus while only 185 are Boeing 737 aircraft.
