BIG BULL is ready to fly…

-Vedant Vinayak Kulkarni

There is a saying in the English language. “Only those who Dare may Fly” and Dare is the second name of India’s own Big Bull, Mr. Rakesh Jhunjhunwala. Jhunjhunwala is in the news again because of his new decision to invest in the ‘Aviation Sector’ in the midst of a pandemic-struck world when people are thinking twice before flying to foreign lands. International Civil Aviation Organization (ICAO), UN specialized agency for international aviation regulations and policies, cleared the stats for last year’s aviation sector's total revenue worldwide.

In a historic study done by ICAO, the stats came forward for ‘an unprecedented decline in the history of Aviation Industry.’ With over loss of $371 billion only for the Airlines, the number goes much higher when we try to count the supporting industries too. Now, coming back to our main question, is this a really good time to invest in a handicapped Aviation Sector in the first place? In times when well-established companies are struggling to survive, is it really a good decision to invest in Aviation? Any man with the stats will say NO probably but the plans of Mr. Jhunjhunwala seem different.

Mr. Jhunjhunwala decided to start an Airlines Company and he named it as ‘AKASA’. He’s ready to pump $35 million (approx. Rs 260 crores) in the sector to own the company. He’s even planning a fleet of a total of 70 planes and that too in mere 4 years. That’s what we can call a serious dedication. But why be a part of this possible future bankruptcy-like idea? What’s there that Mr. Jhunjhunwala sees and the rest are unable to comprehend. Let’s break it down.

Mr. Jhunjhunwala is planning his company to be a one-stop destination for the masses of India. Direct competitors of his company will be low-rate Indian Airline Giants like SpiceJet and IndiGo. Ultra-low-cost carriers is what AKASA would like to call their fleet of planes but how do they manage to cut down the prices of the tickets even less than that of already established companies which we mentioned above? Here lies the Mind of India’s Greatest Ever Stockbroker. Mr.Jhunjhunwala is planning to do this for a while now it seems because the time he chose to invest is crucial. When everyone is looking for Airline Companies, it is eminent to forget about the manufacturers of the planes which Airline’s fly.

We are going to talk about a prominent player in this plane game ‘Boeing’- A company well known for its flagship range of products that it delivered over time but Boeing is in a massive problem right now. The cause for this massive problem is the crashing of 2 planes in less than 5 months which resulted in the killing of over 300 plus people. The crash happened to the same plane model, “Boeing 737 Max”. As a result of these deaths, major aviation regulation boards across the globe banned Boeing 737 Max in various countries. This resulted in the number of orders for the same model falling from 837 in 2018 to just 69 units in 2019. Losing orders ultimately resulted in the profit game also. From a profit of $10.4 billion in 2018 to a loss of $629 million in 2019. Covid gave another shock to the company by delaying a total of 787 deliveries till 2021 at the cost of losing $12 billion in the current year alone.

Mr.Jhunjhunwala is planning to grab this absolute win-win situation with complementary ‘Bargaining Power’ as a buyer over the company Boeing. By acquiring the assets in the bulk quantity, Jhunjhunwala is planning to make his fleet of astounding 70 aircraft. By buying the planes at unprecedented discounts, Jhunjhunwala is trying to cut down the costs of overall flying and be the number one player of the ultra-low-cost airliner game. Former president of IndiGo Airlines, Mr.Aditya Ghosh joined hands with Jhunjhunwala to triumph over yet another pinnacle. With the mind who is behind a case study model IndiGo Airline, Mr.Jhunjhunwala seems pretty confident about his future ventures.

As for Mr.Jhunjhunwala, the time is right because Indian Aviation was and is in the boom in the past few years (excluding Covid-19 years). The concept of Secondary Airports which act as an important factor for cost-cutting in the expenditure of these companies is seriously being discussed all around the country and with the number of thee types of amenities, Big Bull played his cards.

Now only time will tell us that these stats, calculations, and speculations are going to be true or it’s just another shot in the air.