Akasa Air sees no dip in passenger demand post Air India plane crash

Business Standard

22-07-2025

Passenger demand remains unaffected since the AI171 crash last month, with Akasa Air recording 'healthy' load factors and continued traveller confidence in the airline industry, Chief Financial Officer Ankur Goel said on Tuesday.
'We really haven't seen any impact. I go back to the data and see the load factors, and they are very healthy,' Goel said at a media roundtable here.
He added that people are still flying with confidence. 'Despite the anguish, we believe the sector is resilient and robust. People are still travelling with a lot of faith and confidence that airlines will do everything possible for them to have a safe experience and safe travel,' he noted.
Regarding new investors, Goel said regulatory approvals of their investment are in the final stages. 'We are very close to the fag end of the process,' he said, adding there is no external borrowing planned.
Akasa Air, which began operations in August 2022, had on February 6 announced that it had signed agreements with investors, including Premji Invest, Ranjan Pai's investment office, and 360 One Asset, to infuse fresh capital into the airline.
Goel on Tuesday dismissed any immediate concern over delays in Boeing deliveries, saying regular communication with the aircraft maker has kept the airline's confidence intact.
'The communication with Boeing is that the planes are coming sooner than later. This is not a high-risk element on the top of our minds,' he said, adding that Akasa continues to receive reassurances from Boeing.
Akasa expects its entire Boeing order of 226 B737 Max planes to be delivered by 2032. This will support annual growth of 25-30 per cent in fleet size over the next several years.
From 2027, the airline will also begin receiving the larger Max-10 variant, offering 227 seats compared to 189 in the Max-8 aircraft currently in its fleet.
The airline now operates 30 aircraft, including 23 Max-8s and seven higher-capacity Max-8-200s. Goel said increasing seat count per aircraft and utilisation were helping drive down unit costs.
Aircraft utilisation has risen to over 13 hours per day, compared to 10.5 hours initially. 'This was a conscious call. Now, we are using our planes more,' Goel said.
The airline is also maintaining a strong pilot pipeline. 'All our pilots will start flying by the end of this fiscal year. We currently have 770 pilots,' he said.
Goel noted that FY25 losses widened due to rapid growth in network, but key financial indicators have improved. 'Our EBITDA margin has become better by 50 per cent in FY25,' he said.
While overall losses remain, unit revenue (earnings per available seat kilometer) rose 13 per cent and unit cost (cost per available seat kilometer) dropped 8 per cent YoY, driven by scale and efficiency, he noted.
He also confirmed that Akasa is not rushing to lease older aircraft to bridge capacity. 'We see what is financially prudent for us. We wanted to wait for the new Boeing capacity,' Goel explained.
Goel said the airline aims to have one-fourth of its total capacity deployed on international routes by the end of this fiscal year.
Currently, 16 per cent of Akasa's operations are international, and the airline views international flying as critical for improving cost and revenue performance.
Higher stage lengths and counter-seasonal demand from overseas routes are helping reduce volatility in earnings, especially during the domestic lean period of July to September.
Goel credited the government for supporting airline growth through taxation reliefs given on aviation turbine fuel (ATF) and maintenance, repair, and overhaul (MRO) services.
He said Akasa remains committed to building for the long term, with a clear focus on improving its RASK-CASK differential, strengthening cash reserves, and maintaining capital discipline.
Narrow-body aircraft leases typically run 9-12 years, which means that most of Akasa's Max fleet will stay through 2032. 'Not a lot of planes will be returned to lessors,' Goel said. This means its total fleet size by the end of 2032 is expected to be around 226.