InvestorQ : What are the risks that you see in the kind of airline venture that Rakesh Jhunjhunwala is planning and would it be tough?
Chandralekha Desai made post

What are the risks that you see in the kind of airline venture that Rakesh Jhunjhunwala is planning and would it be tough?

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NISHA Nayak answered.
4 months ago
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Clearly, it is not going to be an easy ride as there are a plethora of challenges. If you look back at the last 20 years, 3 events have literally disrupted flying in a big way. First, it was the 9/11 attacks that resulted in a series of airline bankruptcies . Then the oil price spike from 2007 onwards put pressure on airline margins. Finally, COVID-19 looks to reshape the aviation space with long-term implications. Don’t forget the impact of WFH on flying.

There are practical considerations too. Airline companies thrive on the spread between the RASK and the CASK, which depicts the gap between revenues and cost per average seat kilometre. In India, this spread is extremely volatile hitting profitability. This industry has a number of companies like Jet, Kingfisher, Sahara, Paramount, Deccan, East West, Damania, Modi Luft etc winding up quickly. It remains to be seen how he runs the business profitably.

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