The Indian airline's space is setting up for the entry of two airlines Jet Airways 2.0, and Akasa amid the Covid-19 regulations on the aviation sector.
Context
The Indian airline's space is setting up for the entry of two airlines Jet Airways 2.0, and Akasa amid the Covid-19 regulations on the aviation sector.
What is the status ofthe aviation market in India?
- Currently, airline IndiGo is India’s largest airline with over 54% market share in the domestic passenger market followed by state-owned Air India, SpiceJet, GoAir, Vistara, and AirAsia India.
- The upheaval of the Indian airline industry is due to the deep losses reported in 2020-2 because of the Covid19, a situation which has persisted with the second wave in the new fiscal.
- Massive, perennial losses have created a debt trap that has resulted in most airlines having very limited means of re-capitalization.
- The Government of India is providing no direct support to airlines and lenders have by and large closed their doors for them, even for restructuring purposes.
- Akasa is an upcoming “ultra-low-cost carrier”, or ULCC, which is being launched by stock market investor Rakesh Jhunjhunwala, who will hold a 40% stake in the airline company.
What is the ULCC model?
- Under the ULCC airline business model, the company focuses on keeping operational costs even lower than typical budget airlines like IndiGo and SpiceJet.
- ULCCs operate withminimal costs to ensure profitability.
- In the low-cost model, airlines unbundle certain amenities which are usually associated with the full-service airline experience such as seat selection, food, and beverages, etc.
- Under the ultra-low-cost model, there is an even further unbundling of services like checked-in baggage, cabin baggage, etc.
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