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February 27, 2024
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Indian carrier Akasa Air has placed a firm order for 150 Boeing MAX 10s and 8-200s. The order was announced today on the opening day of Wings India 2024, the airshow held in Hyderabad. Akasa Air has increased its total MAX orders to 226 aircraft with the latest order.

The agreement is good news for Boeing, which is being scrutinized for production quality management after the Alaska Airlines door plug issue on January 5. Although the deal had been anticipated for some time, it is the first MAX order since this accident.

The order provides Akasa Air with a steady aircraft delivery stream through 2032, cementing the company’s domestic and international expansion. In a statement, Akasa said that it has become the only Indian airline in the history of civil aviation to reach an order book of over 200 aircraft within 17 months of commencing operations.

The airline started commercial operations in August 2022. At the Dubai Air Show in November 2021, Akasa Air placed an initial order of 72 Boeing 737 MAX aircraft, followed up with four Boeing 737 MAX 8 aircraft in June 2023.

Commenting on the order, Vinay Dube, Founder and CEO, said: “This large and historic aircraft order puts Akasa on a path of becoming one of the top 30 leading airlines in the world by the turn of this decade,” adding “in addition to supporting our rapid domestic expansion, the efficiency, and economics of these new airplanes position Akasa to launch international routes in the coming months.”

The Indian government’s rules require an airline to have a fleet of at least 20 aircraft before flying on international routes. Akasa currently has a fleet of  22 aircraft. It has been granted the right to fly to Riyadh, Jeddah (Saudi Arabia), Doha (Qatar), and Kuwait. Currently, the airline flies to 18 Indian cities, including Mumbai,  Bengaluru, Chennai, Delhi, Guwahati, Agartala, Lucknow, and Goa.

Commenting on the order, Stephanie Pope, Boeing’s Chief Operating Officer, said: “The efficiency and versatility of the 737-10 and 737-8-200 will support Akasa Air’s expansion to meet soaring demand for air travel in the region for many years to come.”

The news of the new order was first broken on X (earlier known as Twitter) by Dube in March 2022, when he said that the airline would place a triple-digit order by the end of 2023. Akasa joins the list of other Indian airlines that have placed mega orders since February last year. It started with Air India placing a Letter of Intent for 470 aircraft which was split between Airbus and Boeing. The order includes 400 narrowbody and 70 widebody aircraft.

At the Paris Airshow, a few months later, IndiGo announced that it was placing an order for 500 A320neo family aircraft. A few days later, Air India confirmed the MoU for 470 aircraft shared between Airbus and Boeing.

The large orders of new aircraft come in the backdrop of the Indian President, Draupadi Murmu announcing on January 31 last year that India has become the third largest aviation market. 

Intense negotiations

Commenting on the Akasa Air order, Satyendra Pandey, Managing Managing Partner of Aairavat Technology & Transport Ventures Private Ltd, felt that all indications intensely negotiated the order. Akasa’s pricing is likely quite competitive and will help position itself well. Its capacity needs are now locked through 2032, so the aggression pattern will likely be fairly aggressive.

“The order also positions Boeing back in the domestic market, and with this order coupled with the Air India and SpiceJet existing order book, Boeing will have 540+ orders for the MAX in India alone,” he says. But Pandey cautions: “Even so, given the complexity of the market, the orders may be the easiest part. The proof of success will lie in the financing, induction, and profitable deployment of these orders.”

Pandey points out that Akasa is flying in a market where two airlines have more than 80 percent of the market, adding that, as such, there is certainly room for a third and a fourth player. “But the intensity of the competition and the complexity of the market cannot be underestimated,” he says.

Pandey believes that whether or not Akasa will become India’s first Boeing MAX 10 operator remains to be seen. “The Boeing 737 MAX 10 is expected to enter service later this year, and if the economics and customer choice hold, it can be a good fit for Akasa’s international expansion plans,” he opines.

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Former Senior Deputy Editor at Business Line (aka The Hindu Business Line)

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