After flying high in the Indian equity markets space, Rakesh Jhunjhunwala is all set to up the ante in the Indian skies. Dubbed the Indian Warren Buffett, the billionaire investor is planning to enter the airline industry with a 70-aircraft fleet within four years.
Jhunjhunwala is reportedly considering investing $35 million and would own 40 per cent of the carrier. He expects to get a no-objection certificate from India’s aviation ministry in the next 15 days, he said in a Bloomberg Television interview on Wednesday. The ultra-low cost airline will be called Akasa Air and the team, which includes a former senior executive of Delta Air Lines, is looking at planes that can carry 180 passengers, he said.
Jhunjhunwala is undertaking this endeavour on the optimistic prediction that more people will start travelling by air again, according to a report by Bloomberg. “For the culture of a company to be frugal you’ve to start off fresh,” the highly successful trader said in the interview. “I’m very, very bullish on India’s aviation sector in terms of demand," he then went on to add.
The move is considered to be quite bold in the current times for a sector that is among the worst affected by the pandemic. It is also to be noted that the Indian aviation sector was struggling even prior to the pandemic. Kingfisher Airlines Ltd., once the country’s second-largest domestic carrier, ended operations in 2012, and Jet Airways India Ltd., which was recently approved to fly again, collapsed in 2019.
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While demand for air travel has been hit globally, India’s aviation industry is at greater risk of delayed recovery as the threat of a third wave of infections looms. Airlines are feeling the impact.
When it comes to rivalling the existing competition in the skies, Jhunjhunwala seemed undeterred as he told Bloomberg, “I think some of the incremental players may not recover.” He then added, “I’ve got some of the best airline people in the world as my partners.”
A new entrant in the airline space would increase the competition in a market where IndiGo holds the majority pie currently. On Tuesday, IndiGo reported a loss for the sixth straight quarter as travel remained restricted due to the resurgence in Covid-19 cases. However, Jhunjhunwala seems to be undeterred.