The 737 MAX cockpit. Photo: AFP

Billionaire stock trader Rakesh Jhunjhunwala has placed an order for 72 Boeing 737 MAX jets for his proposed startup airline Akasa Air.

The deal is valued at $9 billion at the list price and was signed at the Dubai air show on Tuesday. For Boeing, the order is a shot in the arm and would help it boost its share in the Indian market, currently dominated by Airbus. In fact, in India budget carrier SpiceJet is the only airline that operates 737 Max planes.

Akasa Air’s order includes two variants from the 737 MAX family, including the 737-8 and the high-capacity 737-8-200.

The Directorate General of Civil Aviation had in August allowed the MAX jet to fly after imposing a ban nearly two-and-a-half years ago. Taking a cue from other aviation bodies, the Indian civil aviation regulator had in March 2019 imposed a ban on 737 Max flights following two fatal crashes involving the aircraft — Lion Air in October 2018 and Ethiopian Airlines in March 2019.

Akasa Air received a no-objection certificate last month from the civil aviation ministry. 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.

Often referred to as India’s Warren Buffet, 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 he feels some of them may not recover, thereby leaving the space for new players.

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

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. Scheduled international flights continue to remain suspended since March last year.

After many unsuccessful bids, the government last month managed to sell the troubled state-owned airline Air India to the Tata Group for 180 billion rupees. The deal includes sale of 100% of Air India and budget-carrier Air India Express and a 50% holding in the ground-handling company AISATS. Civil Aviation Minister Jyotiraditya Scindia recently said that the ailing airline will be transferred to Tata Group in the third week of January.