‘India’s Warren Buffett’ Rakesh Jhunjhunwala to buy new airlines
The world is grappling with fears of recession, jet fuel prices skyrocketing and aviation is a costly industry. But the billionaire known as “India’s Warren Buffett” is launching an airline on Sunday. It was a rare departure in entrepreneurship for Akasa Air co-founder Rakesh Jhunjhunwala, who made his fortune on the stock exchange as a value stock investor and is often compared to the chairman and CEO of Berkshire Hathaway. Rakesh Jhunjhunwala said at an industry event in February, “Many people question why I started the airline. Instead of answering them, I say that I am ready to fail.”
Many such initiatives have failed in recent years.
Fugitive tycoon Vijay Mallya is fighting extradition from Britain on charges of financial fraud, after the bankruptcy of Project Kingfisher Airlines in 2012, costing Indian banks more than $1 billion. Entrepreneur Subrata Roy kept Air Sahara as part of his empire for more than a decade, until persistent losses forced him to sell self-made billionaire Naresh Goyal’s Jet Airways in 2007.
The jet collapsed in 2019, with many blaming the Air Sahara deal for its collapse. “People say that to become a millionaire, you first become a billionaire and start an airline,” said Anas Rehman Junaid, founder and managing director of The Rich List, Hurun India, but one of the fastest growing air travel markets in the world. As one, a country of 1.4 billion people it has also proved to be a wealth creator for some airline entrepreneurs.
“The world’s richest aviation billionaires are from India: founders of IndiGo,” says Junaid, referring to Rakesh Gangwal and Rahul Bhatia, whose airline, launched in 2006, is India’s top domestic carrier. In addition to British entrepreneur Richard Branson, whose net worth of $6 billion is derived from diversified Virgin Group companies, Junaid says Gangwal and Bhatia – each worth more than $4 billion – have taken over from the “PurePlay Aviation business”. Made the most of luck.
Market analyst Arun Kejriwal told AFP: “He is a shrewd investor and a very savvy businessman. But running an airline is not like trading stocks.” Analysts expect Jhunjhunwala to delegate day-to-day operations to a management team of industry stalwarts who are modeling Akasa on the likes of Ryanair and Southwest Airlines.
But a sharp rise in jet fuel prices and a weak Indian rupee have clouded the outlook for the industry, which is still recovering from the Covid-19 pandemic. The pandemic has cost India’s air travel industry an estimated $8 billion over two years, according to research by aviation market research firm CAPA. The government’s estimate is $2.5 billion. Still, many airlines are desperate to serve the growing middle class, and Narendra Modi’s government has promised to build 80 airports by 2025, making it a major market for manufacturers Boeing and Airbus.
‘The greenest airline in the world’
Sanskrit for Aakash – For Aakash is positioning itself as an ultra-low-cost carrier, with tickets 10 percent cheaper than competitors. It will operate two single-aisle Boeing 737 MAX aircraft between the four cities from Sunday and is expected to have a fleet of 18 by the end of next year. It also claims to be the world’s “green” airline, with staff uniforms consisting of recycled rubber soles and clothing made from marine debris. But analysts say the Boeing 737 MAX has been banned in some countries after two crashes that killed a total of 346 people. People. Had gone