Vinay Dube, founder and CEO of Akasa Air, stated on Thursday that domestic demand for air travel in India remains resilient despite macroeconomic headwinds. Passenger traffic continues to grow even as the sector faces volatility in aviation fuel prices and currency exchange rates.
According to Dube, the current issue is less about demand and more about fuel prices and fluctuations in the rupee's exchange rate, which he views as a short-term problem. He added that even if the situation persists, the company has the financial means to overcome it without difficulty.
Fuel costs and currency exchange rates significantly impact airline profitability. Aviation Turbine Fuel (ATF) accounts for approximately 35–40 percent of an Indian airline's operating expenses, making it the largest cost item. Furthermore, many other major expenses, including aircraft leases, maintenance payments, insurance, and a significant portion of spare parts, are denominated in US dollars. Consequently, a weakening rupee increases costs, even if base dollar prices remain unchanged, and rising ATF prices further squeeze margins.
Airlines often struggle to fully pass these increased costs onto passengers through fare hikes, especially in a competitive market, which puts pressure on profitability. However, Dube noted that the development of international airports in Navi Mumbai and Noida will help alleviate long-standing capacity constraints at key aviation hubs.
He emphasized that major metropolitan areas like Mumbai have faced serious slot limitations—regulatory limits on the number of takeoffs and landings—for decades. Dube believes that the emergence of such airports in large cities where restrictions have been in place for over 10 years is a remarkable achievement.
To support its expansion, Akasa Air plans to build a specialized hangar for Maintenance, Repair and Overhaul (MRO) at Noida International Airport. Regarding airport charges set by the Airports Economic Regulation Authority in recent months, Dube stated that the airline is adapting to regulatory decisions within its normal operations, while acknowledging that carriers cannot yet fully pass on increased input costs to passengers due to sharp rises in fuel prices.
Despite price pressures, operational performance at the two new major airports remains high, and the load factor—the percentage of seats filled on a flight—matches the airline's network average. Akasa Air's capacity is distributed between 75 percent domestic and 25 percent international operations, with West Asian destinations such as Riyadh and Abu Dhabi accounting for over 80 percent of its international capacity.
According to Dube, the airline demonstrated strong operational results in the April-June quarter, recording nearly a 30 percent growth in Available Seat Kilometers (ASK)—a capacity metric calculated by multiplying the number of available seats by the distance flown. During this quarter, revenue and passenger traffic grew faster than capacity itself.
Akasa Air holds about a 6 percent share in the domestic market, operating a fleet of 40 aircraft, with another 186 aircraft on order for long-term network expansion. Dube is confident that the order book will ensure stable growth in both domestic and international markets. He also noted that India's young demographic and growing propensity to spend on travel will support the airline's long-term international growth, and asked for the company to be classified as an ELC—an experience-oriented airline.
