SpiceJet

Chapter-1

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Introduction of Aviation Industry

The Aviation Industry encompasses almost all aspects of air travel and the activities that help to
facilities it. This means it includes the entire Airline Industry, aircraft manufacturing, research
companies, military aviation, and much more.

Aviation began in the 18th century aviation begins with the development of the hot air balloon;
Anand apparatus capable of atmospheric displacement through buoyancy. From that time,
aviation has been technologically revolutionized by the introduction of the jet which permitted
a major from of transport through the world operating all types of aircraft. Air traffic controllers
are concerned with aviation safety.

Aviation refers to flying by using of an aircraft, like an aero plane. It also includes all the
activities and industries which is related to flight, such as air traffic control. The In aviation
biggest of the many uses of aviation are in air travel and military combat. It and air travel.
Aviation creates employment, enables tourism, facilitates trade, enables tourism and in the
world.

Civil Aviation includes three major categories:

a) Civil Aviation, b) General Aviation, c) Military Aviation.

Civil Aviation: Civil Aviation means flights and aircraft used for business purposes and for
personal purposes such as transporting of goods or cargo and passengers, and also for military
purposes. Commercial air transport including scheduled and non-scheduled flights. Its aerial
work is in which aircraft is used for specialized services such as agriculture, surveying,
photography, search and rescue, etc.

Enforcing safety standards in the local aviation environment. In the world most of the countries
are members of the International Civil Aviation Organization (ICAO) and work together to
establish standard and recommended practices for civil aviation through that agency.

All civil aviation authorities are responsible for monitoring, setting, and enforcing safety
standards in the local aviation environment. In the world most of the countries are members of

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the International Civil Aviation Organization (ICAO) and work together to establish standards
and recommended practices for civil aviation through that agency.

Fig: Civil Aviation

General Aviation: general aviation is the aviation which covers a huge number of activities,
both commercial and non-commercial, including private flying, gliding and many others. In
recent years the trends in general aviation experimental aircraft, light-sport aircraft and very light
jet.

Some examples of General Aviation:

 Aerial firefighting.

 Aerial Photography.

 Aerobatics.

Air Ambulance.

 Air Cargo Flights.

 Air Charter.

 Air Racing.

 Air Shows.

 Airship.

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 Air Taxi.

 Angel flights.

Fig: General Aviation Aircrafts

Military Aviation: the military aviation consists of military aircraft and other flying machines
for the purpose of conducting or enabling aerial war fare, including national airlift means air
cargo to provide logistical supply to forces stations in a war theater.

In defensive role, military aviation provides close air support to land-

based army and the threats of enemy air strike. In naval warfare military aircraft plays a
significant role to detect and neutralize submarines and warships to keep free from enemy attack
or threat.

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Fig: Military Aircraft

FAA: The Federal Aviation Administration (FAA) regulates military aircraft it is the largest
transportation agency of the U.S. government and regulates all the civil aviation in the country as
well as over surrounding international.

Fig: Logo of FAA

The FAA authority of the International Civil Aviation Organization. It formed in U.S. on august
23, 1958; 63 years ago. Its preceding agency is Civil Aeronautics Administration.

DGCA: The Directorate General of Civil Aviation (DGCA) is a statutory body of the Indian
Central Government to regulate civil aviation in India. Formed under the Aircraft (Amendment)
Bill,2020, the DGCA investigates aviation accidents and incidents, maintains all regulations
related to aviation and is responsible for issuance of licenses pertaining to aviation like PPL’s
SPL’s and CPL’s in India. It is headquartered along Sri Aurobindo Marg, opposite Safdarjung

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Airport, in New Delhi. Joytiraditya Scindia is minister of civil aviation and Deputy Minister is
V.K. Singh, Arun Kumar (IAS), Director General G. Rajsekhar, JDG Ravi Krishna, JDG
Ashutosh Vasistha, DDG R.S. Jamwal, Dy. Director of Operations, Kunal Chopra, Asst and
parent department is Airport Authority of India, parent Regulator is Ministry of Civil Aviation
(India). Director of Operations. The Government of the India is planning to replace the
organization with a Civil Aviation Authority (CCA), modelled on the lines of the American
Federal Aviation Administration (FAA).

Fig: DGCA Logo

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1.1History of Aviation Industry

More than 2 thousand years the history of aviation has been extended. Orville and Wright four
years of research and design efforts with a 120-foot, 12 second flight at Kitty Hawk, North
Carolina the first powered flight in a heavier-than a machine capped on December 17, 1903.

Leon Delagrange was the first who fly as a passenger, he rode with French pilot whose name is
Henri Farman from meadow outside of Paris in 1908. Charles Furnas became the first American
airplane passenger when he flew with Orville Wright at Kitty Hawk later the year.

In Florida on 1st January, 1914 the first scheduled air service was began. A plane which is
designed by Glenn Curtiss that could take off and land on water and this could be built larger
than any plane because it did not need the heavy undercarriage which is required for landing on
hard ground. An auto parts maker Thomas Benoist, decided to built a sea plane or a flying boat,
for a service across Tampa Bay called the Sr. Petersburg-Tampa Air Boat Line. Ex-St was the
first passenger. 18-mile trip in 23 minutes was made by Petersburg Mayor A.C Phail, over the
two-hour trip by boat is a considerable improvement. One passenger at a time in the single plane
service accommodate. Four months after operating two flights a day, in winter season the
company folded with the end.

Fig: Brief look of history of aviation

World War 1

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These and other early flights were headline events, to catch on the general public the commercial
aviation was very slow, most of people were afraid to ride in the new flying machines.
Improvement in aircraft design also were slow. However, with the advent of World War 1, the
military value of aircraft was quickly recognized and production increased significantly to meet
the soaring demand for planes from governments on both sides of the Atlantic. Most significant
was the development of more powerful motors, enabling aircraft to reach speeds of up to 130
miles per hour, the speed of pre-war aircraft more than twice. Increased power also made larger
aircraft possible. At the same time, for commercial aviation in several respects the old war was
bad.

On building military aircraft, it focused all design and efforts of production. In the public’s mind,
flying became associated with bombing runs, surveillance and aerial dogfights. In addition, there
was such a large surplus of planes at the end of the war that the demand for new production was
almost nonexistent for several years- and many aircrafts builders went bankrupt. Some European
countries, such as Great Britain and France, nurtured commercial aviation by starting air service
over the English Channel. However, nothing similar occurred in the United States, where there
were no such natural obstacles isolating major cities and where railroads could transport people
almost as fast as an airplane, and in considerably more comfort. The salvation of the U.S.
commercial aviation industry following World War 1 was a government program, but one that
had nothing to do with the transportation of people.

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Fig: Military Aircraft -Old War 1

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1.2 Introduction of SpiceJet Airlines

SpiceJet is a low-cost carrier based out of India, headquartered in Gurgaon.it is the second
largest airline in the country by number of domestic passengers carried, with a market share of
13.6% as of March 2019. The airline operates 630 daily flights to 64 destinations, including 54
Indian and 15 international destinations from its hubs which are located at Delhi and Hyderabad.

Fig: SpiceJet Boeing 737 MAX

In 1994 Modiluft was established as air taxi provider, the company was acquired by Indian
entrepreneur Ajay Singh in 2004 and re-christened as SpiceJet. In May 2005 the airline operated
its first flight. KALANIDHI MARAN acquired a controlling stake in SpiceJet in June 2010
through Sun Group which was sold back to Ajay Singh in January 2015. The airline operates a
fleet of Boeing 737 and Bombardier Dash 8 aircraft.

SpiceJet slogan: Red. Hot. Spicy. In June 2015, the airline unveiled its current logo with a new
tagline Red. Hot. Spicy. SpiceJet names all its aircraft with the name of an Indian spice.

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SpiceJet Codes:
Legal Name: SpiceJet Limited
ICAO Code: SEJ
Airline Code: 775
IATA Designator: SG
Region: Asia Pacific
City: Gurgaon.

1.3 History of SpiceJet Airlines

 Earlier known as Royal Airways, SpiceJet is a reincarnation of ModiLuft, one of India’s

first post-deregulation airlines, launched in 1994 and shut down in 1996.

 SpiceJet was launched in May, 2005, and is being promoted by Ajay Singh and the
Kansagra family.

 The goal of the airline is to compete with the Indian Railways air-conditioned coaches
and, obviously, offer a better deal to its passengers.

 SpiceJet aircraft are named after spices.

 In 2009, SpiceJet won World Travel Market Award.

 By 2008, SpiceJet became India’s second-largest low-cost airline in terms of market

share.

 In October 2010, after SpiceJet was allowed to commence international flights by the
Airports Authority of India, the first international flight took off from the Delhi to
Kathmandu, followed by flights from Chennai to Colombo.

 In April 2011, SpiceJet chose as the first and primary base for its new fleet of
Bombardier Q400 NextGen aircraft Hyderabad’s Rajiv Gandhi International Airport,

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from where it launched flights to Aurangabad, Belgaum, Bhubaneswar, Goa, Indore,

Madurai,

 Urges at Guwahati, Jaipur, and Varanasi airports.

 In 20Mangalore, Nagpur, Nasik, Raipur, Rajahmundry, Tirupati, and Vijayawada.

 In early 2012, SpiceJet suffered losses as fuel prices were reported to have increased by
as high as 90%. The money spent on fuel exceeded well over 50%, spiraling the airline
into losses.

 In December 2013, SpiceJet launched its first interline agreement with Tigerair. For the
moment, interline booking can only be purchased at www.spicejet.com.

 For the month of December 2013, as per DGCA statistics, SpiceJet was #1 in on-time
performance. On-time performance of scheduled domestic airlines is computed by the
DGCA for six metro airports (Bangalore, Chennai, Delhi, Hyderabad, Kolkata and
Mumbai).

 In March 2014, SpiceJet signed a deal with Boeing for delivery of 42 737-8 MAX
aircraft.

 In August 2014, SpiceJet introduced SpiceMAX, a new product that offers customers a
lot more comfort and convenience for little more money: SpiceMax seats with at least 6
inches more legroom compared to standard seats and priority check-in at dedicated
SpiceMax counters at major airports. With this product, SpiceJet became the only low-
cost airline in India to actually offer greater legroom and comfort in seats that are
marketed and sold as “premium” seats under various names. Boeing 737 aircraft will
have 30 SpiceMAX seats (first five rows), and Bombardier Q400 aircraft will have 4
SpiceMAX seats (the first row).

 In June 2015, SpiceJet unveiled its new logo, with a new tagline – Red. Hot. Spicy. All
SpiceJet aircraft are named after an Indian spice.

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 In 2016, SpiceJet launched SpiceClub, a prepaid cum loyalty card, the first of its kind in
Indian aviation industry, wherein members are offered opportunity to save money and
also get rewarded while spending with the airline. SpiceJet also opened new premium
lo17, SpiceJet placed a firm order for 100 Boeing B737 MAX 8 aircraft, taking its total
order to 155 Boeing B737 MAX 8 aircraft. The airline also ordered 25 Bombardier Q400
NG turboprops, with purchase rights for 25 additional aircraft. SpiceJet will be the launch
customer for the high-density 90-passengers Bombardier Q400 model. The airline plans
to grow its fleet to 200 aircraft by 2020 and expand regionally.

 In March 2018, SpiceJet was awarded India’s Best Domestic Airline award at the Wings
India Awards for Excellence in the Aviation Sector organized by the Government of
India, Ministry of Civil Aviation, and FICCI.

No deadly incidents involving SpiceJet aircraft have been recorded so far.

1.4 corporate overview

The mission of SpiceJet is to become India’s preferred low-cost airline, with the highest
customer value delivering the lowest air fares, to price sensitive customers and to fulfill
everyone’s dream of flying!
According to Indian economic and business growth, the travelling population percentage is
increasing rapidly. Large number of Indians are travelling for both business and pleasure and
everyone needs to save both money and time. The vision of SpiceJet is to address that and ensure
that flying is for everyone.

The power to fly for everyone

SpiceJet offers fares that are reasonably priced and significantly lower than most of the airlines,
with a dynamic fare structure. With contemporary interiors and modern graphics and different
type of colors, now days SpiceJet is been used more by the traveler. A SpiceJet Ter will feel that

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‘this is the smart, international way to travel, I’ve made the smart choice’. SpiceJet is committed
to make sure that the passengers are feel good at the end of a flight and feels fresh when they
arriving at their destination on time.

The power of performance

SpiceJet invests heavily in safety, impeccable maintenance and a high level of expertise.
Experienced pilots, engineers and maintenance crew go through rigorous training and are hand-
picked for their technical knowledge and expertise. So, we can rest assured that there is no cut-
back in this key area of modern day flying.

The power behind the power to fly

SpiceJet’s key management personnel are all senior, seasoned professionals and have significant
international experience in both launching and managing low-cost airlines. With thousands of
cumulative man hours in the industry, the management is committed to bring to customers in
India all the benefits of the global revolution in the skies. SpiceJet aims to make travel
comfortable, affordable and refreshingly efficient experience for all.
Welcome on board India’s newest, smartest and most affordable low-fare airline. India, get ready
for the power to fly!

1.5 Corporate Affairs

Ownership and Structure

SpiceJet Limited is publicly traded under NSE: SPICEJET, with a market

capitalization of about ₹2,214.28 Cr as of 1 April 2020.

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On 30 March 2020, HDFC Mutual Fund bought 3.4 crore shares of SpiceJet from the open
market constituting 5.45% stake.

Headquarter

SpiceJet is headquartered in Gurgaon, India. Ajay Singh serves as the managing director of the
airline since January 2015. The airline's logo consists of 15 dots arranged in three rows of five
each in the order of their reducing sizes on a red background. In June 2015, the airline unveiled
its current logo with a new tagline Red. Hot. Spicy. SpiceJet names all its aircraft with the name
of an Indian Spice.

1.6 Destination

As of November 2019, SpiceJet operated 630 flights daily to 52 Indian and 12 international
destinations. It operates hubs at Delhi and Hyderabad, which is the primary base for its fleet of
Bombardier Q400 aircraft. After completing five years of flying, SpiceJet was allowed to
commence international flights by Directorate General of Civil Aviation on 7 September 2010.
SpiceJet launched flights from Delhi to Kathmandu and Chennai to Colombo and the first
international flight took off on 7 October 2010 from Delhi.

Fig: SpiceJet destinations

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Codeshare agreements
SpiceJet codeshares with the following airline:

 Amirates
 Gulf Air

Fig: Codeshare Agreement

1.7 Fleet
As of November 2021, the SpiceJet operates the following aircraft:

SpiceJet Fleet

Passengers
In
Aircraft Orders Notes
Service Tota
C Y
l

Boeing 737-
3 — — 149 149
700

186 186
Boeing 737-
36 — —
800
189 189

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144 144
Boeing 737-
5 — —
700
149 149

Boeing 737-
1 — — 189 189
900

Boeing 737-
4 — — 212 212
900ER

Boeing 737
13 192 — 189 189
MAX 8

Boeing 777-
— 2 TBA
200ER

De Havilland
Canada Dash 22 — — 78 78
8-400

De Havilland
Order with 25
Canada Dash
10 15 — 90 90 purchase
8-400
rights.
NextGen

SpiceXpress Cargo fleet

Airbus
1 — Cargo
A340-300

Boeing 737- Deliveries

700BCF through 2022
Launch
3 17 Cargo customer in
Boeing 737- India for the
700BDSF 737-700
freighter

Boeing 737-
1 — Cargo
800BCF

De Havilland 3 — Cargo

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Canada Dash
8-400F[41]

Total 102 224

Fig: SpiceJet Boeing 737 MAX 8

Fig: SpiceJet Boeing 737-900ER

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Fig: SpiceJet De Havilland Canada Dash

8-400.

1.8 New Orders

SpiceJet placed its first firm order for 20 Next-Generation Boeing 737-800s in March 2005, with
deliveries scheduled up to 2010. In November 2010, the airline ordered 30 Boeing 737-800s. On
9 December 2010, Bombardier Aerospace announced that SpiceJet had placed a firm order for
fifteen Q400 NextGen turboprop airliners with options for another fifteen. SpiceJet used its fleet
of Q400s for short-haul operations.

In March 2014, the airline signed a US$4.4 billion deal with Boeing for the procurement of
42 737 MAX 8 aircraft. In 2015, SpiceJet was in talks with both Boeing and Airbus for a
possible order of more than 100 single aisle aircraft, either Airbus A320neo or the Boeing 737
MAX with the same being confirmed by managing director, Ajay Singh, in a conference in
Dubai.

In January 2017, the airline placed a firm order for 100 737 MAX 8 aircraft, and revealed itself
as the airline behind the 13 MAX 8 aircraft previously attributed to an unidentified customer,
taking its total order to 155 MAX 8 aircraft with purchase rights for 50 additional MAX 8 and
wide-body aircraft. The budget carrier plans to grow its operational fleet to 200 airplanes by the
end of the decade and expand regionally with the new 737 MAX family of airplanes.

In June 2017, the airline signed a letter of intent with Bombardier at the 2017 Paris Air Show, to
purchase up to 50 Q400 aircraft, catering to growth in passenger traffic arising from its
participation in the Indian government's UDAN regional connectivity scheme.

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It is announced to induct 16 Boeing 737-800 NG in response to fulfil demands in local and

international expansion. It was ordered due to the fleet of 737 MAX being currently banned and
the downfall of jet airways. Due to the closure of all Jet Airways flights, they have place orders
for 6 additional Boeing 737-800 NG and 5 more Bombardier Q-400 in Dry Lease to cover the
shortage in the Indian aviation industry.

1.9 Historic fleet

Over the years, SpiceJet operated the following aircraft:

a) Airbus A320-900ER, b) Airbus A330-900 Leased from Hifly.

1.10 Services
SpiceJet has moved away from the typical low-cost carrier service model of economy class -only
seating. The airline offers premium services under the name Spice max, whereby passengers can
obtain additional benefits including pre-assigned seats with extra legroom; meals on board;
priority check-in and boarding; and priority baggage handling; at a higher fare. Otherwise
SpiceJet does not provide complimentary meals in any of its flights. It does sell full in-flight
meals on some flights. SpiceJet operates its frequent-flyer programmed but does not provide
any in-flight entertainment options.

1.11 SpiceXpress

SpiceXpress is the air cargo division of SpiceJet. The cargo airline was launched in September
2018 and commenced services on the Delhi-Bengaluru-Delhi.

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1.12Partnerships

SpiceJet has partnered with Trip factory and EasyMyTrip for selling holiday packages on its
platform.

1.13 Spice Shuttle

Spice Shuttle is a fully owned subsidiary of SpiceJet which operates sea planes and several other
shuttle airplane services.

Spice Shuttle is scripting a whole new chapter in Indian Aviation by being the pioneers in
launching India’s very first seaplane service. This wholly-owned subsidiary of SpiceJet is an
endeavor to further embolden the UDAN scheme that seeks to connect the unconnected parts of
India, and thus fulfil the Government of India and honorable Prime Minister Shri Narendra
Modi’s dream of a connected India. Spice Shuttle will, in the days to come, not only save travel
time by connecting the previously unconnected regions but also provide a big boost to travel and
tourism. The very first phase of this ambitious endeavor now connects Sabarmati Riverfront in
Ahmedabad to Statue of Unity in Kapadia.

SpiceJet has conducted thorough seaplane trials in India since 2017 and is the only Indian airline
to explore air connectivity through water bodies such as rivers or inland waterways. While under
the first phase, trials of the land plane were conducted in Nagpur and Guwahati, the second phase
involved the amphibious aircraft for which trials were held at Mumbai’s Giraud Chowpatty.
Seaplanes are the perfect flying machines that can help penetrate into untapped markets and
regions that have challenges owing to its topography.

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Fig: Spice Shuttle

SpiceJet also operates a dedicated air cargo service under the brand name Spicexpress offering
safe, on-time, efficient and seamless cargo connectivity across India and on international routes.

1.14 SpiceJet Cargo

SpiceJet Cargo, a division of SpiceJet airlines, offers safe, on-time and efficient air freight
transportation across India backed by SpiceJet’s state-of-the-art infrastructure and professional
expertise.
SpiceJet Cargo offers the capability to transport between 2 to 4 tons on our Boeing aircrafts
and 500 to 700 kgs on our smaller Q400 series.
We have 400 scheduled daily flights; this amounts to a total capacity of approximately 600
tons on a daily basis.
The Cargo team is backed by years of experience, and is fully capable of providing
professionally handled for cargo and logistical services to all parts of India.
The array of products and services offered by SpiceJet Cargo includes general cargo services
that cater to all types of general cargo, we also offer transportation of Human Remains, Live
animals (Certain Breed) and express cargo services. The maximum acceptable dimensions for
each package are L48” XB52’’XH34’’. With individual package weight not exceeding
100kgs.

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We can book cargo directly at their officed across India, or through our authorized agents.
Bookings should be made at least three hours prior to flight departure time, and are subject to
availability of space.
Direct bookings with SpiceJet Cargo will require payments to be made in cash.

1.15 Aircraft Maintenance Engineering

The prime responsibilities of the Aircraft Maintenance Engineers include making repairs,

troubleshooting problems, conducting inspections and make upgrades to aircrafts. Prior to the
take-off of the aircraft, the Aircraft Maintenance Engineers inspect the air vehicle and sign the
Certificate ensuring safety.
Aircraft maintenance engineers or mechanics are responsible for checking the systems on
airplanes and helicopters in between flights to ensure the aircraft is safe to fly. To work in
aircraft maintenance, people will need specific qualifications and certification.

1.16 Flight Operations

Operations - These including dispatch, flight planning, flight watch, weather data provision,
operations control, ground to air communications and integration with crew, schedules and
maintenance planning. Gate allocation, slot control, ATC and airport management can also be
covered.

Types of Flight Operations:

Flight operations include:

 Arrival Procedures.
 Approach and Landing.
 Ground Operations.
 Terminal Area.
 Night.
 Gliding.
 Unmanned Aircraft Systems (UAS)

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1.17 Growth of aviation industry

The civil aviation industry in India has emerged as one of the fastest growing industries in the
country during the last three years. India has become a third largest domestic aviation market in
the world and is expected to overtake UK to become the third largest air passengers’ market by
2024.

But the coronavirus pandemic paralyzed the aviation industry throughout 2020. For instance,
revenue in the global aviation industry grew at a compound annual growth rate of around 5.3
percentage between 2009 and 2019, reaching 838 billion U.S. dollars in 2019.

Fig: Aviation global growth analysis

Job growth: An increase of passengers will have knock-on effect of stimulating more jobs in
the aviation industry. The 10 million jobs directly in the aviation sector are around 4.4 times
more productive than the average job around the world, and there will be millions more Aviation
jobs created over the next decade.

Commercial Aviation Growth And Forecast 2021 – 2039:

During last decade, commercial aviation growth has undergone an extraordinery renewal prosess
is operating costs have been reduced, unprofitable routes have been eliminated, and older less
fuel-efficient and less emission-efficient aircraft have been grounded.

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Besides, something that we have all witnessed, and which has contributed to the increase in
airlines operating revenues, has been the breakdown and fragmentation of the services offered to
the customer.

In this article, we analyze the growth of commercial aviation from 2021 to 2039, reviewing the
demand for aviation personnel, the growth in deliveries of new aircraft, or the creation of new
routes in different geographical regions, among others.

1.18 Current Scenario of aviation in India

Airlines in India about 13 to 15 per cent of their revenues towards maintenance-the second-
highest cost item for airlines after fuel. India is moving forward to become the world’s third
largest civil aviation market by 2024.

Currently, major airlines connect 103 operational airports within the country and many more
across the globe. Despite the RCS-Udan scheme, India’s aviation industry is largely untapped
with huge growth opportunities. The Indian government is planning to invest $1.83 billion for
the development of airport infrastructure along with aviation navigation services by 2026. India’s
total passenger traffic stood at 199.60 million in the period April to October 2019, with 1.5
million aircraft movements. The Mumbai-Delhi air corridor is ranked the world’s third-busiest
route. Total freight traffic for the same period was two million tones. There are 604 aircraft
operated by schedule airline operates in India. Airlines in India spend about 13 to 15 per cent of
their revenues towards maintenance-the-second-highest cost item for airline after fuel.

Generally, airline carry on-tarmac inspections (A and B check) in-house and work with third
party Maintenance, Repair and Overhaul (MRO)for engine, heavy maintenance (C and D checks)
and modifications.

1.19 Future of Aviation Industry in India

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The aviation industry sector has emerged as one of the most rapidly developing industries in
India. India is presently considered as the third largest domestic civil aviation market in the
world. The International Air Transport Association (IATA) affirms that the country will surpass
the UK and will reach the second place by 2026.

The aviation sector in India has witnessed a tremendous change in both Civil and Military
Aviation in the last three years. The job opportunities within the industry are highly increasing
and it is the right time for candidates who aspire to build a progressive career in aviation
industry.

Increase in air traffic: The latest report on civil aviation predicts an overall development in air
traffic. The number of passengers and also the volume of goods and mails carried by airplanes
today show a substantial increase over those of the last few years. This indicates that the civil
aviation will have a bright future.

Investments: The aviation sector is expected to witness great flow in investments from privet
players. By 2020, the number of aircraft touches the sky is expected to be 800. The low
penetration ratio provides a big opportunity for investment in Indian aviation sector.

Defense: Aviation being not only a very important form of peacetime communication but also a
vital part of the defense organization, the state cannot remain indifferent to its development
along proper lines.

Popularity: In near future, domestic air travel will be more popular than before and expected to
become the ordinary way of transportation. The demand for aviation industry in recent time
predicts the concrete reality of the future.

Favorable climate: Aviation industry can grow immensely as India has very suitable weather
conditions almost all the time. The Government is taking different measures for helping the

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growth of aviation industry, so that the industry may play its part in the complete development
which India is planning for its people.

1.20 UDAN Scheme

UDAN is regional connectivity scheme spearheaded by the Government of India. The full form
of UDAN is ‘Ude Desh Ka Aam Nagarik’ and aims to develop smaller regional airports to allow
common citizens easier access to aviation services.

The UDAN Scheme is a key component of the Prime Minister Narendra Modi's National Civil
Aviation Policy (NCAP) which was released by the Ministry of Civil Aviation (India) on 15 June
2016. The scheme will be jointly funded by the central government and state governments,
several states have come on board by signing the "Memorandum of Understanding" with the
union government for this scheme. UDAN RCS will connect an unspecified number of new
regional routes, by operationalizing 100 regional airports by the end of 2018-2019 financial year,
with a target of 13 lakh (1.3 million) annual passenger seats, requiring ₹200 crore (2 billion
rupees) Viability Gap Founding (VGF) annually. Qualifying routes must have three to seven
flights per week from the same airport.

The scheme has two components. The first component is to develop new airports and enhance
the existing regional airports to increase the number of operational airports for scheduled civilian
flights from 70 (in May 2016, total 98 operational including army airports) to at least 150
airports (by December 2018) with regular scheduled flights. Initially more than 100 underserved
(no more than 7 scheduled flights per week) and unserved regional airports will be developed by
December 2018, for which the initial funding of ₹45,000 million (equivalent to ₹54 billion,
US$710 million or €620 million in 2020) for the enhancement of 50 regional airports was
approved in May 2017. Out of the total 70 airports included in round-I, 43 are regional airports
to be newly operationalized. RCS-Udan operations have commenced from 13 regional airports
and additional 12 regional airports are ready to receive flights. 18 regional airports still require
significant upgrade (November 2017). The second component is to add several hundred
financially viable, capped-airfare, new regional flight routes to connect more than 100
underserved and unserved airports in smaller towns with each other as well as with well served

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airports in bigger cities by using "Viability Gap Funding" (VGF) where needed. Initially, three
separate rounds of bidding for the award of routes will be concluded by the end of 2018. Union
government share of "Viability Gap Funding" is from the chess applied to flights to popular
routes to main cities and respective state governments have also offered additional benefits to the
flight operators to make UDAN-RCS viable.

Number of aircraft jumped 38% to 548 in December 2017 from 395 in 2014 and 50 aircraft are
being added every year. Subsequent phases with inclusion of seaplanes will boost the number of
potential landing sites from nearly 500 airports to over five lakh (500,000) waterbodies as well as
more locations along India's 7,000 km coastline. SpiceJet placed a US$400 million order for 100
of these 12-seater amphibian seaplanes (December 2017).

UDAN Scheme-SpiceJet:
SpiceJet said the latest expansion forms part of its strategy to boost connectivity between metro
and non-metro cities to help meet growing travel demand. Some of the new routes being
launched are part of the Indian government's UDAN scheme, designed to increase regional
flying.

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SpiceJet launches 28 new flights under UDAN scheme. The airline stated that it has launched 14
other direct flights connecting metros and non-metros on domestic routes. UDAN was launched
by the government in 2016 to provide regional air connectivity to unserved and underserved
airports across the country at affordable fare.

Reaffirming the airline’s conviction on the Regional Connectivity Scheme, SpiceJet has started
operating on the new UDAN routes of Kishangarh- Ahmedabad-Kishangarh, Lakhimpur-
Guwahati-Lakhimpur, Jaipur-Amritsar-Jaipur, Delhi-Jharsuguda-Delhi, Hyderabad-Jharsuguda-
Hyderabad, Kolkata-Jharsuguda-Kolkata and Bhopal-Udaipur-Bhopal from March 31, the airline
said in its statement.

297 routes and 53 airports have been operationalized under this scheme. Taking the next stride in
boosting regional aerial connectivity in India under RCS-UDAN (Regional Connectivity Scheme
-Ude Desh Ka Aam Nagarik), the second direct flight commenced operations from Hyderabad to
Nashik.

Chhagan Bhujbal, Guardian Minister, Nashik, and officials of the Ministry of Civil Aviation and
the Airport and the Airport Authority of India were present at the launch.

Post the successful launch of flight operations by Alliance Air on the Hyderabad-Nashik route,
SpiceJet has become the second airline to commence direct flight operations on this route.

SpiceJet was awarded the Hyderabad-Nashik route under the RCS-UDAN-2 bidding process.
The airline is being provided by Viability Gap Founding (VGF) under the UDAN scheme. The
airline will operate four weekly flights and deploy its 78-seater Q400 aircraft. Nashik is the 14 th
destination to be connected under UDAN by SpiceJet.

Apart from trade and tourism opportunities, Nashik city is known as the city for the Shirdi Sai
Trimbakeshwar temples and is known as the Grape and Wine capital of India.

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Chapter-2

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2. Research Design

2.1 Statement of the problem

Airline, Airport and Air Transport facilities of airline company integrates the global economy
providing vital connectivity on a national, regional and international scale. It helps generate
trade, promote tourism and create employment opportunities. Airline companies provides air
transport services for travelling passengers and freight. Their goals are in their areas. Global
(appeal to all passengers, whether for leisure or business travel in order to create repeat
customers). Premieres (ensure that passenger receive the highest quality and service where ever
they encounter the airline. Airline (maintain the focus on aviation with the latest equipment,
product and services.

Hence my study is on “SpiceJet Airline Pvt Ltd”.

2.2 Objectives of the study

1. To understand the differences between domestic and international airlines.

2. To understand the functioning of SpiceJet Airline Company.

3. To have a detailed insight of various functional departments of SpiceJet Airline Company.

4. To understand various products and services of SpiceJet Airline Company that creates value
and customers delight.

2.3 Scope of the study

1. The study in confined to SpiceJet which is a domestic airline company.

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2. The study concentrates on understanding the functioning of various functional departments.

3. The study is on a domestic airline company in India.

2.4 Research Methodology

2.4.1 Research Design: the study is Descriptive in nature.

2.4.2 Collection of data:
The data collected for the project is totally based on secondary sources. The various
secondary sources of data are airline company website, LinkedIn profiles of the airlines,
Various articles and journal of aviation industry and previously done projects on airline
companies and airline industry.

2.5 Plan of Analysis

The data are collected by the different secondary sources are further discussed with the faculty
guide for deeper understanding. The findings related to functioning of the airline company and
suggestions to be proposed are understood.

2.6 Limitations of the study

1. The study is limited to use of data from the secondary sources to understand the functions and
various functional departments.

2. Due to pandemic situation, visit to airline company was not possible and hence available of
data was limited.

3. The time duration was too small to understand the complete functioning of the airline
company.

Suggestions given may not be accurate as the study is not based on primary data.

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2.7 Chapter Scheme

Chapter 1 – Introduction

Chapter 2 – Research Design

Chapter 3 – Company Profile

Chapter 4 – Corporate Social Responsibility

Chapter 5 -- Conclusion & Bibliography

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Chapter-3

3.Company Profile

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3.1 Introduction
SpiceJet Limited is a domestic low-budget air carrier which provides scheduled flights between
major cities in India. The Company operates a fleet of Boeing 737 aircraft. E-booking and e-
ticketing facilities are available online along with telephone booking. SpiceJet’s maintenance
support is handled by KLM and technology from Star Navigation, Russel Adams and Tech Log.

Company Description: SpiceJet aims to add a little flavor to the life of India’s budget-minded
travelers. The company offers low-priced flights to almost 20 cities throughout India using a
fleet of about 20 Boeing 737s, which are suited to the short-to medium-range flights the
company makes within the country. In addition to flights, the company offers corporate incentive
programs and travel insurance. In conjunction with the State Bank of India and GE Capital
Services, it also offers a SpiceJet branded MasterCard. The airline was formed in 2015 and plans
to offer international flights. Media magnate Kalanithi Maran owns about 40% of SpiceJet
through his KAL Airways.

Executives:

a) Name:- Ajay Singh, title:- Chairman/Managing Director/Co-Founder.

Fig: Ajay Singh

b)Name: - Sanjib Taneja, title: - Chief Financial Officer.

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Fig: Sanjib Taneja

c)Name: -Ashish Vikram, title: - Chief Technology & Innovation Officer.

Fig: Ashish Vikram

Board Members:

a) Ajay Singh (SpiceJet Ltd)

b) Anurag Bhargava (Director), (IREO Management Pvt Ltd).

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Fig: Anurag Bhargava

c) Shiwani Singh (Director).
d) Ajay Chhotelal Aggarwal (Director).

Financial Statement:

Dun & Bradstreet collects private company financials for more than 23 million
companies worldwide.

Financial data as of March 31, 2021 (12-month period) in USD.

Annual Revenue 2021 is $688.38 million USD (1 USD =72.4428 INR).

3.2 History of SpiceJet Ltd

SpiceJet Ltd is India's best low-cost airline delivering the lowest airfares with the highest
consumer value. The company operates 119 flights daily to 18 cities namely Ahmedabad
Bangalore Bagdogra Chennai Coimbatore Delhi Guwahati Goa Hyderabad Jammu Jaipur Kochi
Kolkata Mumbai Pune Srinagar Varanasi and Visakhapatnam. As on March 31 2019 the
Company maintained a fleet size of 76 aircraft with which it operated approximately 460 flights
per day covering 53 domestic and 9 international destinations. SpiceJet Ltd was incorporated in
the year 1984 with the name Genius Leasing Finance and Investment Company Ltd. In the year
1993 the company ventured into domestic aviation operations under technical partnership with
Deutsche Lufthansa AG. In the year 1994 the name of the company was changed from MG
Express to ModiLuft Ltd. In June 1994 the company entered into a management agreement with
Lufthansa to manage their entire Airline operations. The company suspended their Airline

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operations in the year 1996 after dissensions grew between Lufthansa and the company. During
the year 2000-01 the name of the company was changed from ModiLuft Ltd to Royal Airways
Ltd. The company started their commercial operations of domestic flight services on May 23
2005 with three leased Boeing 737-800 aircraft. During the year 2004-05 they signed an
agreement with Boeing for acquiring 20 (737-800) aircrafts and in May 4 2005 the company
changed the name of the company from Royal Airways Ltd to SpiceJet Ltd. In May 5 2005 they
entered into a strategic tie up with Indian Oil Corporation Ltd. During the year 2005-06 the
company integrated with various travel related website like Indiatimes makemytrip travelguru
and cleartrip to boost their sales through Internet. They also entered into a sale and lease back
agreement with Bacock & Brown Aircraft Management along with its long-term strategic partner
Normura Babcock & Brown Co Ltd covering sixteen brand new Boeing 737-800/-900ER aircraft
valued at over USD 1.1 billion based on the manufacturer's list prices. In November 2005 the
company launched their daily direct flights between Delhi and Kolkata. They also launched their
services to two new spice cities namely Jammu and Srinagar. In March 27 2006 the company
launched their first co-branded credit card with State Bank of India in association with
MasterCard International.

3.3 Inflight Service

cookies, and beverages with an added ingredient-Extra Safety. SpiceJet value
every passenger’s safety more than anything. Thus, SpiceJet have employed strict
protocols to eSpiceJet brings all passenger’s favorite hot meals and snacks such as
sandwiches, nsure the food on the flight is prepared, packed, and handled with
extreme caution.
Strict Protocols for Inflight Food (during covid19 pandemic):

a) Preparation: The preparation part involves SpiceJet caterers making sure that the food
premises are kept clean and ventilated.
All kitchen utensils would be food-grade quality and well sanitized before use and
the food is cooked at the right temperature for adequate time to make it extremely
hygienic for consumption.

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b) Procurement: As for the packaged products, they are procuring them only from the FSSAI
registered vendors and reputed brands, thus leaving no room for unsafe practices.

SpiceJet catering team makes sure that right from the chef to everyone else in the supply chain
maintains the highest hygiene standards (wearing protecting kit including masks, gloves, and
coverall suits) while handling passengers’ food.

c) Inflight: Inflight, packaging of all non-perishable products will be disposable, and tray
setups used for serving meals and will be rotatable.

The trays will be cleaned and disinfected well before use. Also, utmost care would
be taken by our crew in handling food and beverages and while serving them so that
passengers enjoy their hot meals without having any kind of fear.

3.4 Mission and Vision of SpiceJet

Mission: To become India’s favorite low-cost airline, providing tickets to customers at the
lowest possible prices with the highest consumer value.

Vision: To ensure that flying is no longer only for CEOs and business travelers, but for
everyone.

3.5 Competitors
SpiceJet’s top competitors include Jettime, Binter Canarias, TRANS MALDIVIAN AIRWAYS
and Delta Air Lines. SpiceJet is one of the India’s preferred low-cost airline companies,
delivering the lowest air fares with the highest consumer value. Jettime is a provider of flight
transportation solutions.

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Fig: Jettime Aircraft

Fig: Binter Canarias

Fig: Trans Maldivian Airways

Fig: Delta Airlines

3.6 Achievement and Awards

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SpiceJet was awarded '2008 Emerging Company of the Year Award for Indian Commercial
Aviation' by Frost & Sullivan. The company was ranked amongst the top 10 budget airlines in
Asia by Smart Travel Asia magazine based on a surveyed commissioned 'Best in Travel Poll' on
the low-cost carriers.

Fig: Best Airline Awards 2020

SpiceJet is delighted to receive the 'Best Airline- Aviation Sustainability & Environment' Award
at the Wings India Awards 2020.

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Fig: ‘Best Domestic Airline’ Award

Gurugram, March 09, 2018: SpiceJet has been awarded India’s ‘Best Domestic Airline’ award at
the prestigious Wings India Awarded for Excellence in the aviation sector organized by the
Ministry of Civil Aviation, Government of India and FICCI.

Fig: SpiceJet at the Asia One Awards, Singapore

GURGAON, January 31, 2017: It was a clean sweep for India’s favorite airline – SpiceJet at
the Asia One Awards, Singapore – as it walked away with top recognition in three prime
categories. The airline which has been trending all through 2016 with multiple awards and
accolades was adorned ‘Asia’s Greatest Brands – 2016’ by the Asia One Board. The selection
process was supervised by PricewaterhouseCoopers.

Awards and Achievements:

SpiceJet has won the following award for its excellent service across the Indian airspace.

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a) Smart travel Asia’s top 5 best budget airlines in Asia (Aug 2010)

and in top 10 list for 2 consecutive years (Aug 2008 & Sept 2009, Hong Kong).

b) Outlook traveler’s best low-cost airline (Feb 2008 & Feb 2010).

c) Award for best website at ‘World Low-Cost Airlines Asia pacific

conference’ (Jan 2010, Singapore).

3.7 Duties and Responsibilities

3.7.1 Board of Directorates: The Board shall include in its Report the annual report on CSR
Projects as per the format provided in the Annexure to the Rules.

3.7.3 CSR Committee:

a) The CSR Committee shall monitor the implementation of the CSR Policy and CSRR Annual
plan. For this purpose, the CSR Committee shall meet at least twice a year.

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b) In discharge of CSR functions of the company. The CSR Committee shall be directly
responsible to the Board for any act that may be required to be done by the CSR Committee in
furtherance of its statutory obligations, or as required by the Board.

c) The CSR Committee shall place before the Board the draft of annual report on CSR Projects
as per the format in annexure to the rules in a Board meeting of the following year for Board
review and finalization.

d) The CSR Committee shall place before the Board every year a responsibility statement of the
CSR Committee that the implementation and monitoring of CSR Policy, is in compliance with
CSR objectives and Policy of the Company for inclusion in the Board’s Report.

3.8 Organizational Structure

As the organization embarks on its next growth phase, it is imperative for the company to
build Leadership bandwidth, organization structure and People processes, to keep pace
with the high energy Operational delivery at a high level of operational excellence.
During the year under review, SpiceJet continued to attract critical talent as a result of which the
overall employee strength increased from 6,902 in April 2017 to 8,447 in March 2018.
Structured and well calendarized “roadshows” for inflight and Flight operations ensured
continuation of the required numbers. The company ensured 75 internal job postings.
Resultantly, the existing workforce of SpiceJet found avenues to grow professionally outside
their regular work areas. The quarterly individual achievement recognition programmed to
identify the “Spice Stars” was launched during the year with a lot of fanfare.
An automated process ensured timeliness and control on the entire flow of the
programmed. A large number of people got recognized and strived harder to find a place on the
pedestal.

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The “Long Service” award continued with increased fervor, with 950 more people coming within
this ambit. The Company continued to promote the culture of equality and diversity with more
than 30% of women being recruited in its workforce. Two complete batches of 29 lady pilots
were hired to reinforce the organizational commitment to this direction. Moreover, a full-time
psychologist was brought onboard to provide emotional counsel to deal with workplace-related
issues and personal challenges.

3.9 SWOT ANALYSIS

The SWOT analysis is a very useful tool for understanding and decision-making for all sort of
circumstances in business and organizations’ is an acronym for strengths, weakness,
opportunities, threats. SWOT analysis is perfect for business planning, strategic planning,
competitor evaluation, marketing, business and product growth and research reports. The SWOT
analysis allows companies to identify the positive and negative influencing factors inside and
outside of a company or organization.

Strengths

1) Strong backing by the promoters.

2)LCC segment is ever growing in the country.

3) One of the largest low-cost carriers in India.

4) Has a reach to around 35 Indian destinations and 6 international destinations.

5) Good presence in the market due to its branding and advertising.

Weakness

1) Low market shares due to presence of significant competition.

2) Small load deficiency compared with competitors.

3) It has limited destination and no international presence.

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4) Dependency on leased assets.

Opportunities

1) Middle class taking to the skies.

2) More opportunities to grow on popular routes and destinations.

3) International tie-ups would boost brand image and reach.

4) Growing interest on tourism.

5) Growing aviation market.

6) Growing population for demographics.

Threats

1) Strong competition in LCC segment.

2) Rising fuel costs.

3) Changing govt. policies.

3.10 Company analysis

SpiceJet is owned by Kalanithi Marans Sun Group with the promoter holding 53.48% stake in
the airlines through his personal holding and through Kal Airways Pvt Ltd. It is the India’s
second largest airline by domestic passenger share. It plies 340 plus daily flight to 49
destinations; including 41 Indians and 8 international cities. SpiceJet currently has a fleet of 23
Boeing 737-800/900ER aircraft along with some 15 Bombardier Q400 aircraft SpiceJet in
addition to low flares also offers SpiceMax which is a combo offer provided by the airline that
includes priority check-in and extra legroom seat. In addition to their Spice Add-ons has a host
of benefits that includes domestic travel insurance, in-flight meals, excess baggage allowance,

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bag out first, SpiceMax, students’ discounts (SpiceJet (n.d) in Wikipedia, retrieved on December
28,2014.

3.11 Financial performance analysis

In the case of SpiceJet ltd, once India’s most popular budget airline, the crisis has arrived less
than four years after Chennai-based media baron Kalanithi Maran bought a 37.7% stake in the
airline in 2010 to become its biggest shareholder (Shukla,2014). The company has been under
loss from FyY2010 saw it posted an accumulated loss of Rs.1335.07 Mn, FY2010 3525.67
million, FyY2010 saw it a positive 614.49 but Fy 2011 1,011.55, Fy 2012-(6,057.68), Fy
20130(10,032.44), up five times from Rs 191cr in the previous fiscal. SpiceJet posted a net loss
of Rs 599cr in the corresponding quarter of the last financial year. The previous year also saw a
net loss of Rs.10 bn, more than five-fold increase from 2012 (Chong,2014). Towards end of
November the airlines had the airports authority of India (AAI) withdrawing credit terms
because of an accumulation of Rs 2 bn debts. The company has denied this.

Market Share Analysis: These LCCs Indigo, SpiceJet and GoAir (Go First) between them
service 70% of the domestic market besides some overseas routes which doesn’t have a well-
defined LCC.

3.12 Specialized software used in SpiceJet:

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NAVITAIRE

Navitaire LLC is a transportation industry technology services subsidiary of multinational IT

provider for the global travel and tourism industry Amadeus IT group.

It primarily offers systems for passengers’ reservations, travel commerce, ancillary revenue and
merchanting, as well as revenue accounting and revenue accounting and revenue management
to airlines and rail companies.

ARMS

ARMS automate every process within the department utilizing electronic forms and intelligent
approval routing to create efficiencies never possible before.

It automates travel, approvals, budget creation and review, and any process that you are paper
for today. ARMS brings the best solution for managing recruiting data, analyzing and evaluating
prospects and communicating at all levels.

ARMS Web and ARMS Mobile provide easy to find information and every recruiting activity in
your hand. Communicate and collaborate in real-time with ARMS.

NAVITAIRE’S NEW SKIES SKYSPEED

New skies are a next-generation, customer-centric system that integrates internet booking, call
center reservations, GDS connectivity, inter-airline and alliance codeshare itineraries, real-time
reporting, ancillary revenue generation and departure control capabilities.

In use at more than 50 of the world’s most successful airlines-including SpiceJet, air Asia,

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Germanwings, GOL, JetStar and Ryanair-novitiate’s new skies system is designed for both fast-
growing airlines, including newly launched and hybrid carriers.

Hardware used in SpiceJet

. Computers

1) Hewlett Packard (HP)

2) Dell

Flight monitoring screens

1) Hewlett Packard

. Aircrafts

1) Boeing 737 MAX 8

2) Boeing 737-900ER

3) Boeing Dash 8 Q 400

3.13 Market share and competitors market share

SpiceJet is a budget airline company in India with a market share of percent. It was founded in
1993 as ModiLuft and started operation on 5th May, 1993.

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The SpiceJet airlines serves in key cities of India such as Pune, Chennai, Ahmedabad, Goa and
so on. Previously it was owned by the NRI group and it was acquired by the media king
Kalanithi Maran. However, Maran sold his shares back to Ajay Singh in 2015.

Facts about SpiceJet:

Revenue: Rs.7933 billion (US$1.2 billion) (FY 2018).

Net Income: Rs.557 billion (US$81 MILLION) (FY 2018).

Total Assets: Rs.4109 crore (US$600 million) (FY2018).

Employees: 6902 (2017).

Fleet Size: 58, Orders: 169.

SpiceJet 2.0

After a difficult few year for SpiceJet following the grounding of its Boeing 737 Max planes and
outbreak of the pandemic, the airline is ones again exploring ways to expand its presence in
Indian skies.

The carrier has agreed compensation from Boeing for the grounding of 737 Max jets, Sing said
at a press conference on November 23. Boeing’s 737 Max planes were grounded globally in
2019 after two of the aircraft crashed.

SpiceJet aims to cut liabilities by as much as $300 million over six months, raise funds from
banks, potentially consider a warrant issue and induct 50 Boeing 737 Mx planes in its fleet by
December 2023.

The airline has started flying two Boeing 737 Max planes in India and 11 more such aircraft will
start flying over the next 15-20 days.

We are looking to replace our current fleet with the new Boeing 737 Max planes, Singh said.
“Despite Boeing 737 Max not operating in India for over two years, we do not expect there to be
a shortage of pilots to fly the 737 Max planes. All our pilots are trained to operate such aircraft”.

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Pilots will have to undergo an eight-hour training program to learn the operating system of the
new Boeing 737 Max planes, followed by simulated test flights and actual test flights before they
will be ready to operate commercial flights, a senior company official said.

Functional departments of SpiceJet airlines:

The audit covers an exhaustive assessment of nine functional and operational areas inclusive of
organization and management system, flight operations, operational control, flight dispatch,
aircraft engineering and maintenance, cabin operations, ground handling operations, cargo
operations and security management.

Chapter-4
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4. Corporate Social Responsibility

4.1 Meaning of Corporate Social Responsibility

Corporate Social Responsibility (CSR) is a strategic business activity that can boost the
sustainability of the aviation industry. The case of aviation industry has been selected due to
various factors.

Corporate social responsibility is traditionally broken into four categories: environmental,

philanthropic, ethical, and economic responsibility.

4.2 Definition of CSR

Corporate Social Responsibility (CSR) is rooted in the idea that corporations must focus on
issues beyond the balance sheet.

It is also a management concept whereby companies integrate social and environmental concerns
in their business operations and interactions with their stakeholders.

4.3 Summary of CSR

Corporate Social Responsibility (CSR) is rooted in the idea that corporations must focus on

issues beyond the balance sheet. For instance, CSR has had an impact in reducing child labor in

developing countries, making extractive industries more responsible to local communities, and

reducing the environmental impact of hotels. It is also applicable to the airline industry where it

has promoted various types of positive behavior. In a world increasingly concerned with climate

change and that sees as problematic the airline industry release of greenhouse gas (GHG)

emissions at high altitude, regulators are about to set emissions reduction targets for the airline

industry. Given that fuel is the single greatest cost for airlines, and that any reduction in fuel

consumed involves a consequential reduction in GHGs emitted, the airline industry is generally

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eager to reduce GHG emissions. However, several emerging CSR best practices in civil aviation

have incentivized the industry to become more environmentally friendly in recent years. In this

context, this chapter argues that CSR should encourage airlines to go beyond mere self-interest

or regulatory compliance in leading the way to meeting increasingly ambitious GHG reduction

targets.

Overview:

Overview Sections that follow include a theoretical grounding of social responsibility, CSR

practices in aviation, and current academic teaching practices. Eight recommendations for

classroom consideration are presented as a conclusion.

4.4 Initiatives taken by the organization

Corporate social responsibility (CSR) is when a business takes into account its overall impact
socially, economically, and environmentally, and launches initiatives to ensure its positive
impact. Businesses should strategize CSR practices that align with the organization's overall
mission and help support those goals.

Some of the most common examples of CSR include:

 Reducing carbon footprints.

 Improving labor policies.
 Participating in fairtrade.
 Diversity, equity and inclusion.
 Charitable global giving.
 Community and virtual volunteering.
 Corporate policies that benefit the environment.
 Socially and environmentally conscious investments.

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4.4.1 Prerequisites for A Successful CSR Initiative

For a CSR initiative to work, the airline must communicate it without ambiguity and
concealment to the stakeholders, or else both parties would not be able to benefit from it (Anttila
& Kretzchmar, 2010). Failure to communicate it would also lead to damage in reputation.

One such instance is Cathay Pacific’s policy on shark fin carriage. In 2012, Cathay announced a
ban on shark fin carriage that was praised upon by advocates. However, as continued carriage
was exposed in 2016 and public uproar ensued, Cathay’s explanation and failure to clarify the
ban on “unsustainable fins” were heavily criticized (Parry, 2018). Meanwhile, airlines that
embrace clarity in CSR reporting, such as Lufthansa and SAS enjoy better reputation for being
competent corporate citizens (Andersson & Jankowski, 2013). Cathay’s predicament illustrates
how unclear communication of CSR initiatives and poor execution could lead to criticism, which
would damage the airline’s image, while the following counter-examples illustrate that a CSR
initiative will only be beneficial if airlines communicate it clearly without concealment.

4.5 Beneficiaries of CSR

Corporate Social Responsibility (CSR) has been a topic of debate for years. And as globalization
progresses, the impact of the airline industry starts to manifest. The practice of CSR by airlines, a
major constituent of the globalization movement, is of importance due to the multi-faceted
contributions airlines can make towards sustainable development worldwide. In the long-term,
CSR could be beneficial to airlines’ performance, hence a proactive stance should be taken
towards it.

Effects on Financial Performance:

Financial performance of an airline is mainly measured by the following metrics: Return on

Assets (ROA), Return on Equity (ROE), and Cost per Available Seat Kilometer (CASK).

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Empirical studies have suggested that airlines which practice CSR enjoy better profitability.
According to Moon, Lee & Kim (2016), the practice of CSR on the employment dimension, e.g.,
maintaining positive union relations and employee profit-sharing, significantly increased ROA,
especially in FSCs such as Delta and American Airlines. Similar research in Europe by Asatryan
& Brezinova (2014) added that ROE is increased alongside ROA. Both studies suggested that
CSR initiatives on multiple dimensions enhance an airline’s financial performance through
enhancing credibility with customers, community performance and employee relations (Moon et
al., 2016; Asatryan & Brezinova, 2014). To illustrate, Alaska Airlines’ Charity Miles Program
provides air transport for charities and communities in need in the US and is well received by the
public and employees (Knigge, 2017). From this example, it is plausible that consequent
enhancements from CSR helped the airline attract more customers and increase employee
productivity, which in turn increase revenue and ultimately strengthen the airline’s financial
performance.

Furthermore, CSR can reduce operating costs by increasing efficiency, as exemplified by

Lufthansa and Qantas. The former has cut maintenance cost by 15% through overhauling
buildings with energy-efficient features during its “Green-building Programme”, while the latter
has cut fuel costs by 20% through fleet modernization programme in its CSR strategy (Lufthansa
& Qantas, as cited in Anttila & Kretzschmar, 2010). With reference to examples and the
calculation of CASK, the decrease in total operating cost results in a decrease in CASK, leading
to higher profitability and better financial performance.

Effects on Operational Performance:

The operational performance of an airline is measured by the following metrics: ASK, Revenue
Passengers Kilometer (RPK), Passenger Load Factor (PLF) and Total Passenger Carried (PAX).

In addition to financial performance, CSR has also been suggested to be beneficial to an airline’s
operational performance through increasing ASK via integrated fleet modernization in the CSR
strategy, a norm for many airlines (Anttila & Kretzchmar, 2010). The new airliners procured,
made with composite materials, are proven to be more efficient and durable than their
predecessors (Szuladziński, 2017). This implies they can fly more frequently, hence provide

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more ASK. In 2016, Cathay Pacific replaced its Boeing 747s with new Airbus A350s as a part of
its CSR strategy to increase carbon efficiency. By the end of 2016, not only has the airline’s
carbon efficiency increased by 4 g/Available-tonne-kilometer but also ASK by 2.4% (Cathay
Pacific, 2016). This indicates Cathay’s operational performance, i.e., ability to support passenger
demand, was strengthened through CSR.

Effects on Intangibles:

The following intangibles were revealed to directly benefit from CSR, which eventually
reinforce the aforementioned performances.

a. Reputation and Goodwill

Recently, airlines are awarded or have their brand equity increased for CSR efforts.
Contemporary examples include United Airlines’ support for LGBT equality through the
sponsorship of the annual LGBT Mardi Gras, and Etihad’s advocacy on biofuel viability. The
former was awarded Business Leadership Award and named Best Place to Work, and the latter
was awarded 2 UAE Sustainability Awards (Prisco, 2013; Etihad Airways, 2015). It is visible
from these examples that social and environmental CSR could better an airline’s reputation
among its stakeholders and help it differentiate itself from competitors.

b. Customer and Employee Loyalty

There has been evidence that demonstrates the positive relationship between airline CSR and
customer/employee loyalty. A study by Chen, Chang & Lin (2012) revealed that customer
loyalty is positively correlated with airline CSR initiatives, including those related to
environmental protection and corporate citizenship.

It is possible that relevant CSR initiatives, e.g., community services, voluntary humanitarian
airlifts akin to JetBlue’s (Hawkins, 2017; JetBlue, 2017), can help customers identify a positive
image in the airline and stay loyal to it. Furthermore, per Ilkhanizadeh & Karatepe (2017),

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employment CSR leads to “elevated work engagement, career satisfaction and voice behavior
among employees”, i.e., employees work harder, feel happier and are more loyal. A prominent
example is Southwest Airlines, which is known for giving its employees decision-making
freedom - a practice that is identified as one of the reasons behind the airline’s ability to garner
high customer/employee loyalty (Gallo, 2014; Tenney, 2016). This, by extension, illustrates CSR
could lead to improved service quality, customer/employee loyalty and company performance in
the long-term.

Fly Higher with CSR

In most cases, CSR is beneficial for an airline’s performance, financially and operationally,
regardless of its business model. Enhancements of intangibles such as reputation and loyalty,
which reinforce the performance in the aforementioned aspects, were also observed through real-
life examples. It is noteworthy that CSR initiatives must be communicated clearly and
transparently to be successful.

In the real-world, examples of CSR initiatives undertaken by airlines are not uncommon, but
they are certainly not ubiquitous. Airlines are advocates of globalization, and if efforts are taken
to scale CSR efforts, the airlines themselves will become of the ultimate beneficiaries of their
own undertaking.

4.6 Impact of Corporate Social Responsibility

Today the aviation industry operates in a highly competitive environment, with CSR being one
of the sources of competitive advantage. This industry transacts with several negative effects
like noise, carbon dioxide emissions, pollution and work practices.

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Capter-5

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Conclusion
Since the creation of the first machine that could be considered an airplane, people have not been
afraid to create and innovating, pushing the limits of what an aircraft can do. At first it was
purely a fascination and militaristic utensil, until 1916 when Aircraft Transport and Travel was
created and flying was commercialized for the first time. This small European company had
opened a market that would continue to grow for the next 100 years (and probably more).
However, this growth of commercialized air travel brought more and more companies for
customers to choose from, and as a result, more and more competition. Competition is not
necessarily a bad thing, it can expand a market and lower prices for consumers, but it can create
issues in the aviation business. An airline company is a first foremost a business designed to
make money and they need to make enough money to complete with other airlines. Airlines
make money when planes are up in the air and are make no money when their planes sit on the
ground, so in order to turn the largest profit they can, planes are kept on the ground for as little
time of possible. This means that routine maintenance can be rushed, planes that are inadequate
for safe flight can be cleared to be put back in circulation, and pilots may be unfit for duty for
experience or health reasons. It is for these reasons that a when the airline industry is run through
capitalist ideals, it becomes unethical.

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