In the midst of the pandemic, new airlines were formed, including Akasa Air. The airline is entering the sector at an advantageous time, as demand has started to rebound and consumers have become increasingly price sensitive, favoring LCCs. The price-sensitive mindset of the Indian market will benefit Akasa Air and assist in increasing domestic air passenger traffic in India.
According to GlobalData’s Traveler Demands and Flow Database, the number of domestic visits completed via air travel in India increased at a CAGR of 12.5% from 2009 to 2019 (the last normal year before COVID-19). This points to growing demand for domestic services, and a ripe opportunity for LCCs to emerge. India already has solid LCC connectivity due to LCCs such as SpiceJet and Indigo. Considering India’s expanding middle class, huge population, and vast territory, the LCC model has experienced success. The entry of Akasa air will add extra capacity to the Indian LCC market, allowing the fledgling airline to establish itself as a serious competitor.
Accessibility and affordability play an important role for Indians
The success of LCCs in India is because accessibility and affordability are crucial factors for Indians. According to GlobalData’s Q3 2021 Consumer Survey, 56% of Indian respondents claimed affordability and accessibility are important factors when planning a trip. Akasa Air, as an LCC, will be able to meet these needs due to its point-to-point network across the country and competitively low prices.
Because of India’s huge geography, rail travel can result in extremely long journey times for domestic travelers. For example, the fastest train from Kashmir (India’s northernmost part) to Kanyakumari (India’s southernmost part) takes roughly 71 hours. The quickest journey via aircraft, on the other hand, takes about 6 hours. LCCs such as Akasa Air will be preferred by Indians due to their attitudes toward accessibility and affordability, increasing domestic traffic in the process.
The rising middle class prefers LCCs
The increasing number of domestic and international tourists over the past decade is also a sign of India’s developing middle class. As India’s middle class expands, more and more consumers have higher levels of disposable income. As a result, they can afford to travel by plane rather than other modes of transportation. Given India’s expanding population, demand for LCCs may outweigh supply. Future shortages will be met by Akasa Air, given its plan to increase the number of aircraft in its fleet by 12-14 per year. Given the rising demand for air travel, India’s LCC network has been developing year after year. Akasa Air entered the market at the ideal time to meet this demand. The key reason for this surge in air travel demand is India’s burgeoning middle class and GDP. Akasa Air may expand its network beyond India if it first meets its service criteria within the country. The launch of Akasa Air will increase LCC occupancy and domestic passenger flows, assisting in the growth of India’s LCC sector.