CAN JHUNJUNWALA’S NEW AIRLINE TAKEOFF?
This is an analysis done by the following students
- Sai Nikhil
- K. Sai teja
G.Sai teja - Deepak Agarwal
- Suhas
- Devsena
- Vaidehi
- Raajitha
- Mounika
- Manaawini
- Sushmitha Thakur
The news of Dalal Street mogul Rakesh Jhunjunwala’s plans to launch ‘Akasa’ airline has sent all in the airlines industry to sit up and take notice. The first impression from almost everyone was -Why would anyone want to enter a sector that has seen so many airline companies crash. Damania Airways, Air Sahara, Air Costa, Kingfisher Airlines, NEPC Airlines, Paramount, Air Carnival, Air Pegasus to name a few.
In the world of business there is risk and the higher the risk, greater the returns. So goes the saying. Can Rakesh’s airline do the impossible? Can he pull it off? It is a billion dollar question.
The odds are against him. In the last few decades, many tried but ended up burning their fingers. Aviation is a highly capital-intensive business, and then there is FDI curbs that limit Indian players to scale up in terms of technology and route expansion. Aviation turbine fuel accounts for almost 40 per cent of an airline’s costs. Fluctuations in fuel price are a major cause for worry for all players. How would Rakesh manage the volatility is to be seen
Like other airlines in the past, Akasa too swears by low cost but now the airport charges and landing fee is the same for all categories of airlines so there is no great advantage. Moreover, Akasa plans to add 18 aircrafts per year to its fleet which at the moment seems farfetched
Having deep pockets notwithstanding and roping in former bosses of Indigo Airlines and Jet Airways, the industry veterans Aditya Ghosh and Vinay Dube have their task cut out. How will they wade through regulatory hurdles is also a major issue of concern.
On the brighter side, the airport infrastructure in the country is looking up with the Government of India looking to build 100 airports in the next few years. Also, the number of passengers is to rise phenomenally in the coming years. Due to the pandemic, pilots, crew and ground staff of several airlines lost jobs and Akasa looks to gain by bringing them onboard at reasonable salaries.
A man who started with a meager investment of Rs 5,000 capital is net worth of $4.6 billion (Rs 34, 387 crore). He made a name for himself in the stock market business and got the sobriquet of Warren Buffet of India. Can he do the impossible with Akasa? Only time will tell.
Who is Rakesh Jhunjunwala?
What Sachin Tendulkar is to cricket, Rakesh Jhunjunwala is to the stock market in India. He is a trader and also a chartered accountant. Jhunjhunwala runs a privately-owned stock trading firm called RARE Enterprises. Born in Mumbai in the year 1960, he grew up listening about stock market and trading. In the 1980s, he borrowed money from friends and promised to return the capital with higher returns much more that the banks offered.
In 1986 he bought 5,000 shares of Tata Tea at Rs.43 and the stock rose to Rs143 within three months. Keeping alive his risk taking ability, he went on investing and rose to great heights. He is a graduate from Sydenham College.
