Aircraft queue up on the tarmac before taking off at Mumbai airport. Photo: AFP

Even as India’s civil aviation sector reels in the face of Covid-19 headwinds, billionaire stock trader Rakesh Jhunjhunwala is planning to fund a startup airline.

Often referred to as India’s Warren Buffet, Jhunjhunwala is considering investing $35 million and own a 40% share for the proposed ultra-low-cost airline that will be called Akasa Air, according to media reports.

The big bull has approached the civil aviation ministry to get a no-objection certificate and the airline may start functioning by the end of this year. The airline is aiming to acquire 70 aircraft within four years and looking at planes that can fly 180 passengers.

Jhunjhunwala is bullish on India’s aviation sector and hopes more Indians will travel by air in the future. On the other hand, the pandemic has weakened the finances of legacy airlines and Jhunjhunwala feels some of them may not recover.

The billionaire investor has roped in some big names in the aviation industry to pilot the new airline. They include aviation veteran Vinay Dube and former IndiGo airline president Aditya Ghosh.

Dube has held senior positions at Delta, American Airlines, GoAir, and Jet Airways in his 30-year-long career.

Ghosh had worked at IndiGo for 10 years and left in 2018. During his tenure, IndiGo rose from being a fledgling airline to a leading carrier by market share. This new venture will mark his return to the aviation industry.

The other investors in Akasa include Airbnb and Par Capital Management. Dube will be the CEO and own a 15% stake. Ghosh would own less than 10% in Akasa and will not be part of the management. However, he will be on the board as Jhunjhunwala’s nominee.

The Akasa team has been doing its groundwork since last year and Dube is reported to have prepared a technical blueprint for the new airline. Praveen Iyer, who has held several positions at Jet Airways, is likely to be appointed as the chief commercial officer of Akasa, and GoAir veteran Anand Srinivasan is likely to be the chief technology officer.

Air turbulence

The airlines industry in India has been facing turbulence even before the pandemic. Two major players, Kingfisher Airlines and Jet Airways, had to stop operations in 2012 and 2019, owing to financial woes. Although India is one of the fastest-growing markets it has been highly price-sensitive, leaving little room for profits.

The Covid-19 pandemic and travel restrictions have dealt a body blow to the airlines and all of them have been reporting losses for the past few quarters. The rising aviation turbine fuel costs have also added to their burden. For some of them, it has become an existential crisis and they are struggling to raise funds.

The government had made many unsuccessful attempts in the past to sell the state-owned airline Air India. However, now Tata Sons have shown interest and the due diligence process is on. The salt-to-software conglomerate hopes to merge Air India with its existing joint-venture airlines Vistara and AirAsia India.

Meanwhile, the UK-based Kalrock Capital consortium and a UAE-based Indian-origin businessman, Murari Lal Jalan, are in the process of reviving the defunct Jet Airways.