SpiceJet Booking Surging Ahead with Change in Guard at the Top Management

Headquartered at Gurgaon, SpiceJet is one the low-cost carriers in the country. By the end of September 2015, it was at the fourth spot in the domestic sector in terms of market share and number of passengers carried. Founded in 2005, the airline has hubs at Indira Gandhi International Airport, Chennai International Airport and Rajiv Gandhi International Airport. The carrier operates to 7 international and 34 domestic cities, taking its daily count to 250 flights. Its fleet consists of 16 Boeing 737-800, 14 Bombardier Dash 8 Q400 and 4 Boeing 737-900 ER. To make SpiceJet booking for flights to any of its 41 destinations, travellers can take assistance of leading online travel agencies.

 

Ran into Troubled Waters in 2014

 

The last year was one of the worst for this Indian carrier, and there were heavy speculations that its fate might see it ceasing operations similar to that of Kingfisher airlines. During the winter season of 2014 that coincides with the peak season for domestic carriers, SpiceJet was facing serious liquidity constraints leading to many flight cancellations, which resulted in eroding consumer confidence in it. Flight booking was low in that period and competitors were gaining from it. The airline, in a bid to save itself from going down, chose to go for aggressive discount deals on flight tickets; however, it did not help as the losses were too high to ignore. The only way out was to rationalise fleet size by ceasing a few aircraft leases; the brunt of which impacted the operations.

 

Change of Guards: A Boon for the Precariously-Positioned Airline

 

In January 2015, the entire shareholding of the carrier was transferred to one of its founding members, Ajay Singh. Once the control and ownership was transferred to Ajay Singh from its earlier promoters, the company renegotiated contracts, settled outstanding dues, and optimised revenue maximisation and aircraft utilisation, all courtesy the recapitalisation. These prudent measures managed to restore reliability in operations, which resulted in winning back the customer confidence.

 

So far, the carrier has managed to get rid of a major portion of its liabilities and bring down the payable amount from INR 18 billion to INR 11 billion. With the airline enjoying profits in two consecutive quarters, INR 225 million and INR 718 million, in Q4FY15 and Q1FY16, respectively, the days ahead are looking promising for it.

 

Future Planning: Focus on Growth

Though the second quarter of FY16 has always been a weak period over the years, the airline is confident of a good show in the third quarter. The advance flight booking trend for the peak festive and holiday season is what they are banking on. With the operations and profits returning to normalcy, the company management has plans to move its focus towards growth. In this regard, it has planned to add 6 more aircraft to its fleet for the upcoming winter schedule. This would mean that in the coming months, it will fly 291 daily flights instead of 250, thus giving an impetus to heavy SpiceJet booking.

 

The change in management at this airline saved it from a similar fate that of Kingfisher. All the measures taken by the management headed by Ajay Singh not only brought the airline operations to normalcy, but also paved a way for profits quickly. It will be interesting to see how the carrier performs in the upcoming months as the competition is likely to get stiff.