Akasa Air: Akasa is India’s fastest growing airline; we can do in three years what other carriers have spent 15-20 years doing: Vinay Dube

What is happening in the Indian skies right now? There is competition. There is a news flow, a lot of issues we keep hearing about with regards to Boeing. We are going to address that in greater detail, but set the roadmap for us.
Vinay Dube: For me, Indian aviation is growth, excitement and a future of connected cities. It is about passenger convenience and supporting the economy. And at Akasa, we are just very happy to be a part of that because we have got this incredible order for 226 aircraft. So, we are part of India’s growth story. We can help underpin the economic growth as is required with strong transportation links. We are India’s most on-time airline and so we have a real sort of approach to service excellence that we hope is not seen so far. For me, it is just excitement in the future and to top it all off, we are starting our first international flight and so we get to plant the orange Akasa flag in Doha, Qatar just in a few days and we have broken all records with it. We are the first airline to fly internationally within 19 months of launch when most others have taken about six years and that is the reason why I am so excited.

Tell us a little bit more about the other international routes that are planned? What is the timeline in place for that?
Vinay Dube: Beyond Doha, we have to be a little careful in terms of what we can announce as an airline because competition law forbids us from signalling every single destination that you can go to and so we talk really in terms of the traffic rights that we have been allocated because that is largely a public piece of information. So there is Kuwait, Riyadh, Jeddah on the heels of Doha, perhaps later this summer. I cannot give you a definitive timeline because we are working with these foreign governments to get the appropriate approvals before we can launch it. But that is just the start.

Other parts of the Indian subcontinent, whether it is Bangladesh, Sri Lanka, Kathmandu, etc, or Southeast Asia, other parts of the Middle East will be there. You will find Akasa not just entering in record time, but also expanding into international markets in record time because we think we have got the capability, we think the Indian economy and the youth of India today wants international experiences and we are hopefully here to serve.

Why Doha though? Is that the hottest destination right now or an upcoming one?
Vinay Dube: Yes, as you know, different people define hotness in different ways. You ask my wife, she wants to go X; you ask me, I want to go to Y; and I have three kids and they want to go to four different destinations. But over a long period, Doha has a very large demand for a variety of reasons. Some of it linked to tourism, but most of it linked to business. Over a long period of time, you will find that in the Middle East, across the board Indians not only go there as nurses, teachers and doctors but even as electricians and bus drivers and construction workers.

So, there is really a huge spectrum of traffic that travels between India and Doha, as they do between India and Saudi Arabia, India and Kuwait. These are very strong destinations for Indian airlines as a whole.

Well, it seems Akasa so far has been on a stellar run. Within 19 months, you have a fleet of around 24 aircraft, you are flying to more than 20 domestic destinations and the international ones are starting very soon. But one of the main concerns in the market is related to Boeing which is facing a lot of technical issues. So far in India we have not seen any bigger issue as such, but internally are you evaluating aircraft deliveries or considering any other aircraft providers like Airbus? Also are you facing any issues with deliveries?
Vinay Dube: First, Akasa has the highest standards of global safety and we would like to emphasise that no amount of safety is sufficient. As an airline, as an aircraft manufacturer, we continue to push our focus on safety. You had mentioned in India, there are no issues and part of the reason in India there are no issues is because some of the variants that are flying in India are very different from the variants that have reportedly had issues on the Boeing side.

I want to make that extremely clear that our aircraft and the rest of Boeing aircraft continue to get certificates of airworthiness from the regulators, not just in India, but the regulators in the US as well. So, I want to unequivocally state that these are extremely safe aircraft to fly on. And so no, we are not looking at any changes as far as the aircraft that we are flying today here in India and we are very proud and by the way this translates into Akasa’s reliability. We are India’s most on-time airline, not for one month or two months, but literally for the 19 months that we have been in inception and our reliability does not stop at just on-time performance. It goes to our baggage delivery. It goes to the reliability of our technology and every other facet because that is the focus that we have at Akasa.

But are you facing any delays from Boeing’s end?
Vinay Dube: Boeing and us continue to realign our expectations when it comes to aircraft delivery. And at this point in time, our expectations and Boeing’s delivery abilities are highly aligned. But I would like to maybe shed some light because we do get asked whether there are delays or not. I just want to give you our perspective. Our perspective is that a delay of an aircraft here or there, one, two, five, it does not matter, but that is the difference between growing at 150% or growing at 130%. It does not matter to us. It really does not matter whether we grow at 120%, 150%, 80% or 90%. These are growth rates that the world has not seen. These are growth rates that India is proud of. These are growth rates that we can do, not because we are just Akasa, but because we are in India and we are flying and growing on the backs of the Indian economy and so it does not really matter to us.

We are focused on service excellence, reliability and our financial foundation. We have said this before that we are a cash flow positive company. Think of it, 19 months of operation, and we have not spent one rupee, not one rupee of the initial investment that we got two-and-a-half years ago. That is the financial foundation that we are focused on irrespective of whether it is 80% growth or 140% growth and that is the reason why I am saying we are just fine with our expectations.

But to hold on to that 130% growth? Is it a ballpark?
Vinay Dube: Yes.

100-130%.
Vinay Dube: Yes.

I am sure you have a watershed point beyond which a delay from Boeing’s end is going to dampen your growth rate or your back-of-the-envelope calculations? So, how much of a delay is okay and how much beyond that do you sense discomfort?
Vinay Dube: I will tell you that 80% growth is not dampening anything. We rejoice at 80%. We rejoice at 60%. So, there is no such mark. For us, we want to continue to grow with a strong financial foundation; continue to grow with happy employees and incredibly satisfied customers. So a 10%, 20%, 30% differential in growth in terms of what we may have planned two-and-a-half years ago does not dampen our spirits.

But at an average how much months of delay are you seeing right now?
Vinay Dube: These are things we just do not make public and the reason we do not make public is because these tend to take a life on their own as opposed to focus on the fact that Akasa is and has been and will continue to be the world’s fastest growing airline. A delay of a month or two here and there or five months or two months or eight months does not change that statistic and that is the reason why I would prefer to have that conversation related to the incredible growth that we are facing as opposed to a month or two here or there.

So, in terms of this growth that you are looking at, how much capacity are you looking to deploy when it comes to foreign airlines versus domestic if you could share?
Vinay Dube: We do not have specific numbers because one of the things I learned early in my career is that you cannot be emotionally attached to the network decisions that you make. So, if I were to say a 25-75% split, then delivering on that 25% might mean we have to fly some unprofitable international sectors and we just do not want to do that. So, I will answer it in a slightly different way. I will answer it in the fact that we believe we will get to an international domestic mix within the next two to three years that for most mature airlines took 15.

Let me give you a sense of how fast we think we can grow internationally profitably and the kind of potential that India has for international travel. Some of you probably are not young enough to remember this Chevy Chase movie that was released in the 80s where there is this Japanese tourist with the Japanese camera and so in the 80s and 90s there was this nasty stereotype of Japanese travellers going around the world, perhaps not conversant in English, with their cameras.

That Japanese traveller became the Chinese traveller in the 90s and early 2000s. My view is that for the next 20 years it is going to be the Indian tourist that goes all over the world. Again this is not an Akasa story, this is an India Inc story and it is on their backs that we will find Akasa expanding internationally. And so to answer your question, it is going to be pretty massive in a way that has not been seen before. It will take us three years for what other carriers have spent 15-20 years doing.

Which are these profitable international routes that you are actually eyeing right now?
Vinay Dube: Start with Doha where we are flying here in a week, Riyadh, Jeddah, Kuwait. I mean literally all the ones that I have named whether it is Sri Lanka, Bangladesh, Kathmandu, Malaysia, Singapore, Thailand, Indonesia; our planes have an ability to hit Hong Kong, go deep into Indonesia, East Africa. I think over a period of time all of these geographies, the former CIS countries, whether it is Kazakhstan, other places, north of India. I personally spent a long weekend in Vietnam. We have a Vietnam Airlines flight, we have a VietJet flight that is going full all the time. So, you will find all of these destinations are something that not just Akasa flies, but I think over time you will start seeing multiple Indian carriers fly to these countries.

There are other players; Air India for instance has been revamping. IndiGo is expanding. There is a potential comeback of Jet Airways. What about the competitive intensity? Does that worry you?
Vinay Dube: Not at all and the reason it does not worry us is because we continue to be India’s fastest growing airline, we continue to have the most competitive cost structure, we built this in our base, we have got an incredibly solid financial foundation and with that as a base if we can keep our customers happy as we are, talked about our on-time performance, our baggage delivery, I have not begun to touch upon the feedback we are receiving, the way I describe the feedback we are receiving is just a bit of gentility and kindness in terms of our airport experience.

I haveheard that too, with domestic flights via Akasa, great experience.
Vinay Dube: Yes, thank you, thank you for that, we are so proud of our employees. And again to get back to your question here, the growth in India is such that we do not need another carrier to fail for us to succeed. The growth rate in India is such that if we just focus on ourselves, we will be successful and the others can be successful too, that is the India story and so we are really hyper-focused on service excellence, really serving our passengers well.

One of the other concerns that has now been concerning the market is the DGCA norms regarding the pilot fatigue that they are addressing. June 1st is the deadline and a lot of market experts are saying that there would be a pilot shortage in the industry. How are you addressing this issue and is that actually an issue for Akasa at this moment?
Vinay Dube: So, first let me address this very directly in a few different ways. First, let us all, market pundits, airlines, the travellers, applaud DGCA, our regulator, for their continued focus on safety. Let this conversation not be distracted of whether for safety it is going to take five less pilots or five more pilots. This is between us and our regulator to figure out but let me be unequivocal in the fact that we need to applaud every safety measure that we have and we have got a professional, highly competent, transparent regulator and they need to be applauded for that.

Today Akasa has 700 pilots on our payrolls. The number may be 697, I am rounding it up. If you look at how many pilots we need to fly 24 aircraft, it is not 700, it is probably half of that. So, at Akasa, we have got this long-term plan which thankfully has been built on our ability to attract pilots. So, we have talked about service excellence but employee centricity is at the core of what we do at Akasa and so we find ourselves incredibly lucky that pilots have chosen to work for Akasa, very, very fortunate. And so at this point in time, we believe that over a long period of time, we have more than enough pilots and so I would rather stay focused on just applauding the continuous focus on safety that our regulator has as well as we as an airline have.

You have started on international routes. Is there any tactical bench towards whether you are going to be a domestic carrier or international or is it going to be both?
Vinay Dube: It is going to be both. Yes, as simple as that. While international is exciting and we keep telling our employees this, I mean honestly it is a huge moment for us to have this our orange tail being seen in Doha if you can sort of visualise that for our employees that have toiled away at this but at the end of the day domestic and serving our customers here in our India homeland is super important.

You are saying that pilots is not an issue and even if there has been some delay in aircraft, it would not matter your growth much. But over the last six to seven months, your market share has not grown. You might be flying more flights, but your competitors are also increasing the number of flights in the industry. So, how do you plan to increase your market share?
Vinay Dube: We do not plan for market share and you can have that as a headline if you. We plan for customer service. We plan for employee centricity. We plan for our cost structure. We have got 226 aircraft in order and here is another first, if you look at the 120-year history of global aviation, there is not one airline in any part of the world that have placed an order of 226…, well not even close, not even 200 aircraft, not even 175 aircraft within 19 or 20 months. So, growth in market share is something that we will get over a period of time without having to focus on it.

So, we are focused on financial stability, service excellence, employee centricity and reliability. These are the things we are focused on. I do not even look at that market share statistic because we know that by 2030 and here is a bold statement that I will make but we know by 2030 Akasa will be one of the top 30 airlines in the world by size.

Listed?
Vinay Dube: By 2030, yes.

Sooner than that I am guessing.
Vinay Dube: We hope so.

You have got about 200 aircraft orders still pending with Boeing.
Vinay Dube: 202.

What is the delivery schedule right? I mean is it going to be 25 per year for eight years?
Vinay Dube: Again, it is not quite uniformly distributed but we will say these 202 remaining aircraft will be delivered by 2032. And it goes a little up and down. In the initial years it will be a little less. It is easier for us to absorb 30 aircraft on a base of 150 than it is to absorb 30 aircraft on a base of 40 or 50. So, clearly the growth rate in terms of number of aircraft will increase over time even if the percentages decrease, but the number of aircraft deliveries by year will increase over time.

One question on the current trends. Now Q4 is seasonally weak but compared to last year if we see air traffic has been actually better, at least 5% to 10% growth that we are seeing on a YoY basis, so is this because of more discounting that has been going on in the industry or how are the traffic trends?
Vinay Dube: The traffic trends are incredible and again this has nothing to do with Akasa. This is an industry phenomena. This is based on GDP growth. This is based on GDP per capita growth.

This is based on experience when I go to an airport at any time of the year and…. I think now we are the fastest growing aviation market in the world.
Vinay Dube: And we will be for the next 20 years. The number of aircraft in India are going to double by 2030 plus, plus…

The number of airports.
Vinay Dube: Number of airports. I mean, the investment our government is making in airports is incredible. So, what seems to be a seasonally weak quarter getting back is an incredibly strong quarter. And we think we will continue to see these strong quarters for the next 10 years. So, for us this is the golden age for airlines. This is perhaps the best time for the next five to ten years, it is the best time to be an airline and not a bad time to be a traveller as well.

I could not agree more, just be on time that is about it. In terms of the forward booking for the summer season, if you could just share with us in terms of trends, pricing.
Vinay Dube: Yes, incredibly strong. So, incredibly strong, you said trends and pricing from a demand and booking perspective incredibly strong. From a pricing perspective I just like to say India has still and will continue for a long time to have some of the best prices in the world and so that is the reason why for consumers it is fantastic as well.

ET Now: Okay and what amazing airports that we are seeing as well in India. I am sure you have a favourite do you, across the world?
Vinay Dube: I do not. I am happy in any airport.