Rakesh Jhunjhunwala, the Indian billionaire investor, is planning on rolling out around a fleet of 70 aircrafts in a four-year time span for a new airline that he is aiming to set up in India. He is undertaking this endeavour on the optimistic prediction that more people will start travelling by air again, according to a report by Bloomberg. The tycoon is eyeing an investment of approximately $35 million as per reports and with that, he would own 40 per cent of the carriers. He is also simultaneously gunning for a no-objection certificate from the Aviation Ministry of India within the next 15 days or so, he was quoted as saying in a Bloomberg Television interview on Wednesday.
The new airlines will be a low-cost one, relatively speaking and is to be dubbed ‘Akasa Air and the team’. He was also quoted as saying that he will be looking into investing in carriers that can seat 180 passengers. This has been dubbed a bold move by the report, in which Jhunjhunwala is taking a risk in a pandemic-stricken time where most other airlines are struggling to tread water. This all stands against the high-cost background of the aviation industry in India. As per reports, Jhunjhunwala is looking to enter this massive market with a new name and low fares in hope of attracting customers.
While speaking on the entry of his new airlines in the interview with Bloomberg Television, Jhunjhunwala said, “For the culture of a company to be frugal you’ve to start off fresh.” He then went on to add, “I’m very, very bullish on India’s aviation sector in terms of demand.”
Even before the pandemic had hit big airlines such as Kingfisher Airlines Ltd., had to close their doors and put a stop to its operations back in 2012. This was the second biggest airline in the industry at the time in the domestic carrier segment. Similarly, there was also the collapse of Jet Airways India Ltd., which collapsed in 2019 after it was approved to fly once more.
Now, more than ever, the risks of collapse are at an all-time high in light of a potential third wave of the Covid-19 pandemic. Though demand may be up across the world, the Indian aviation industry is still at risk according to reports.
When it comes to rivalling the existing competition in the skies, Jhunjhunwala seemed undeterred as he told Bloomberg Quint, “I think some of the increment players may not recover.” He then added, “I’ve got some of the best airline people in the world as my partners.”
On the subject of the competition, the big players are still struggling. Vistara, which is jointly owned by the Tata Group and Singapore Airlines Ltd., is looking to delay its aircraft deliveries and change up its payment timetable possibly as per reports. Parallelly, India’s largest standing airline, IndiGo, had reported a loss that exceeded their expectations due to the pandemic induced disruptions, said the report by Bloomberg Quint.
The billionaire had recently raised his stake in the private lender stock by adding Rs 25 lakh more to his Federal Bank shares, bulking up his portfolio during the April-June 2021 quarter. With this move, the stock saw a new high on Monday; the highest it has been in the three days preceding it. In total, his holdings jumped from 2.40 per cent to 2.78 per cent as per a report by Live Mint.
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