SpiceJet is an Indian low-cost airline that began operations in 2005. It grew rapidly but then faced financial difficulties starting in 2010 when majority ownership changed. The airline accumulated losses, cancelled flights, and defaulted on payments. A new management team led by Ajay Singh took over in 2015 and proposed a turnaround plan that involved cutting costs and restoring trust. This included paying debts, resuming normal operations, and closing some routes. More recently, in 2018 SpiceJet operated India's first test flight partially powered by biofuel, aiming to reduce fuel costs and carbon emissions going forward.
SpiceJet is an Indian low-cost airline that began operations in 2005. It grew rapidly but then faced financial difficulties starting in 2010 when majority ownership changed. The airline accumulated losses, cancelled flights, and defaulted on payments. A new management team led by Ajay Singh took over in 2015 and proposed a turnaround plan that involved cutting costs and restoring trust. This included paying debts, resuming normal operations, and closing some routes. More recently, in 2018 SpiceJet operated India's first test flight partially powered by biofuel, aiming to reduce fuel costs and carbon emissions going forward.
SpiceJet is an Indian low-cost airline that began operations in 2005. It grew rapidly but then faced financial difficulties starting in 2010 when majority ownership changed. The airline accumulated losses, cancelled flights, and defaulted on payments. A new management team led by Ajay Singh took over in 2015 and proposed a turnaround plan that involved cutting costs and restoring trust. This included paying debts, resuming normal operations, and closing some routes. More recently, in 2018 SpiceJet operated India's first test flight partially powered by biofuel, aiming to reduce fuel costs and carbon emissions going forward.
SpiceJet is an Indian low-cost airline that began operations in 2005. It grew rapidly but then faced financial difficulties starting in 2010 when majority ownership changed. The airline accumulated losses, cancelled flights, and defaulted on payments. A new management team led by Ajay Singh took over in 2015 and proposed a turnaround plan that involved cutting costs and restoring trust. This included paying debts, resuming normal operations, and closing some routes. More recently, in 2018 SpiceJet operated India's first test flight partially powered by biofuel, aiming to reduce fuel costs and carbon emissions going forward.
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CASE STUDY ON SPICEJET
About Spicejet(intro)
Spice Jet is an Indian low-cost airline (a no-frills, discount or budget
carrier airline) that generally offers low fares in exchange for eliminating many traditional passenger services. As of March 2015, it is country's fourth largest airline by domestic passenger share (DGCA, March 2015). Operates more than 270 daily flights to 41 destinations, including 34 Indian and 7 international cities. Began services in May 2005 and bookings were opened on 18th May, 2005 and the first flight was operated from Delhi to Mumbai on 24th May, 2005. In 2004, Ajay Singh along with NRI business family Kansagras , with investment interest in Africa, infused funds and leased 3 Boeings 737-800 aircrafts and renamed it Spice Jet. By 2008, Spice Jet became India's second-largest low-cost airline in terms of market share and was the most profitable airline in the country and the only profitable airline among NSE/BSE listed companies. In June 2010, Indian media baron Kalanithi Maran acquired 37.7% stake in Spicej et. Curious case: Breakdown of spice jet
Chennai based Sun Group acquired SpiceJet in 2010. The inconsistent profits were set off with investments by media baron Kalanithi Maran. Maran invested close to Rs 1500 cr in the airine and ended up owning 58% shares. SpiceJet was in talks with American private equity investors who could bail the airline out from immense losses. PE investors like TPG Capital, Indigo Partners etc- were keen to invest in the airline. However, when the deal was about to take shape, Dayanithi Maran, brother of the majority stakeholder Kalanithi Maran, was accused of misconduct by the CBI in the famous Aircel-Maxis case. The PE firms therefore backed out from SpiceJet investment. With no investors and burgeoning losses, SpiceJet was forced to return planes, cut man power and consequently cancelling flights. This made the airline to default on fuel payments, clearing vendors outstanding and other debt. SpiceJet defaults on salary payment a second time. SpiceJet asks 50 captains in its flight crew to leave in a month. DGCA came into action and prevented booking of tickets from more than 30 days and ensured immediate refund to passengers whose flights were cancelled. Breakdown of spice jet Comeback of Spice Jet
Kalanithi Maran sold its stake in the airline and a new management led by Ajay Singh came into force. Under the leadership of Ajay Singh, the airline proposed a new turnaround plan to Ministry of Aviation. The government had a vital role in bringing SpiceJet back to life. Aviation ministry wrote to AAI and oil companies asking them to allow credit facilities to SpiceJet and also allow the airline to stagger payments to clear its dues. Also, DGCA was asked to lift the 30 day ban on sale of tickets placed on the airline. Simultaneously, Singh himself met the oil companies to resume working with SpiceJet on part payment of their dues. The falling oil prices also helped. Singh identified that their problems were multiplying was because of ‘loss of trust’. The airline was paying a price of loss of trust amongst it customers, employees, vendors etc-. He identified that the only way to win the trust back was by resuming normal operations back. SpiceJet also shut down five domestic and 3 international destinations to optimise their cost. Biojet plane(Biofuel)
Budget carrier SpiceJet successfully operated “India’s first ever biojet fuel flight”on 27th August 2018.A Bombardier Q400 aircraft, partially using biojet fuel, took off from Dehradun and landed at the airport in the national capital. The SpiceJet flight was powered with a blend of 75% air turbine fuel (ATF) and 25% biojet fuel, it said. SpiceJet in a statement said the advantage of using biojet fuel as compared to ATF is that it reduces carbon emissions and enhances fuel efficiency. Made from Jatropha crop, the fuel has been developed by the CSIR-Indian Institute of Petroleum (IIP), Dehradun, SpiceJet said. Around 20 people, including officials from aviation regulator DGCA and SpiceJet, were in the test flight. The duration of the flight was around 25 minutes, according to an airline executive. SpiceJet Chairman and Managing Director Ajay Singh said biojet fuel is low cost and helps in significantly reducing carbon emissions. “It has the potential to reduce our dependence on traditional aviation fuel by up to 50% on every flight and bring down fares,” he said. The biojet fuel has been recognised by American Standard Testing Method (ASTM) and meets the specification standards of Pratt & Whitney and Bombardier for commercial application in aircraft. Note:
After bearing high losses by Spicejet, Spicejet took the first
inititative to launch Biojet plane which will reduce cost for flight tickets benefitted to customers for upraising the demand for Spicejet . This will help Spicejet to overcome all the losses beared by them in past MADE BY YASH GUPTA –MBA 1st year
