Jhunjhunwala-backed Akasa Air signs $9 bn deal for 72 Boeing 737 Max planes

Billionaire investor Rakesh Jhunjhunwala-backed Akasa Air has ordered 72 Boeing 737 Max aircraft ahead of its planned launch next summer.

The 72 aircraft deal, valued $9 billion at the list price, was signed at the Dubai air show on Tuesday. Typically, however, airlines secure big discounts from the original equipment manufacturers while placing orders.

The order is a shot in arm for the US plane maker and would help it to narrow the gap with Airbus which has over 80 per cent share in India’s narrow body fleet. Airbus has over 550 A320Neo on order from IndiGo alone and its delivery pipeline for narrow body aircraft is full until 2024.

Akasa Air’s order includes two variants from the 737 MAX family, including the 737-8 and the high-capacity 737-8-200. The 737 Max was cleared for operations by the Indian civil aviation regulator in August after a two year ban.

While the joint announcement did not give the details, sources indicated that the airline may start receiving its aircraft from April. As per initial plans Akasa Air which will operate with a low cost model plans to induct 20 aircraft in a year. It is likely to have bases in Bengaluru and Delhi. The airline is in discussions with lessors and is expected to do a sale and lease back of aircraft for financing the acquisition.

“India is one of the fastest-growing aviation markets in the world with an unparalleled potential. We are already witnessing a strong recovery in air travel, and we see decades of growth ahead of us. Akasa Air’s core purpose is to help power India’s growth engine and democratise air travel by creating an inclusive environment for all Indians regardless of their socio-economic or cultural backgrounds,” the airline’s chief executive officer Vinay Dube said.

The airline received no objection certificate from the civil aviation ministry last month. Akasa Air has been promoted by Dube who was earlier CEO of Jet Airways. IndiGo’s former president Aditya Ghosh too is one of the founders of the airline which has investments from Jhunjhunwala and Madhav Bhatkuly of New Horizon investment fund.

“The 737 MAX, with its optimized performance, flexibility and capability, is the perfect airplane to establish Akasa Air in the Indian market and ensure it effectively grows its network,” said Stan Deal, Boeing Commercial Airplanes president and CEO.

“Providing the lowest seat-mile costs for a single-aisle airplane as well as high dispatch reliability and an enhanced passenger experience, the 737 MAX will ensure Akasa Air has a competitive edge in its dynamic home market,” the companies said.

“Akasa Air’s order for Boeing is very significant and gets them back in the narrow body market in India. Post Covid-19 pandemic we see the OEMs focusing on stronger and long term players,” said Kapil Kaul, South Asia CEO of aviation consultancy CAPA.

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