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 SPICEJET- LOW COST CARRIER
ABOUT

Spicejet, an Indian low-cost airline, ranks second-largest airline in the country in terms of the number of
domestic passengers carried. The company holds a market share of 9.1% in June 2021. In the fiscal
year 2020, SpiceJet operated around 196 thousand flights to a total of 64 destinations, including 52
domestic destinations and 15 international destinations. SpiceJet operates a fleet of Boeing and Q-400s
that allow for greater efficiency in maintenance and to support its low-cost structure.
The headquarters of the company Spicejet is in Gurgaon, India. Mr. Ajay Singh serves as the Managing
Director of the company since January 2015.
The logo of Spicejet 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 came with its current logo with a new tagline Red.
Hot. Spicy. SpiceJet names all its aircraft with the name of Indian spices.
Talking about the performance, from aircraft to the crew and ground staffs focuses on performance and
are groomed accordingly, smart, friendly, efficient and well-informed. They make ensure that any
interaction will make you feel welcome and looked after. The philosophy behind this is ‘ no-frills but
high-performance.’
SpiceJet invests a lot in safety, impeccable maintenance, and a high level of expertise. Experienced
pilots, engineers, and maintenance crew go through extremely thorough and careful training. So the
passengers can rest assured that there is no cut-back in this key area of modern-day flying.
MISSION, VISION, AND VALUES

01 02 03

Mission Vision Values

SpiceJet's mission is to become
India's preferred low-cost airline,
delivering the lowest air fares with
the highest consumer value, to
price sensitive consumers.We
hope to fulfill everyone's dream of
flying!
SpiceJet's key management Trust
personnel are all senior, seasoned Development
professionals and have significant Taste
international experience in both
launching and managing low-cost
airlines.With thousands of
cumulative man hours in the
industry.
A NOSE DIVE FOR
SPICEJET
In the year 2010, budget airlines were quickly becoming the future of Indian aviation. Spicejet grab this opportunity and ordered
another 30 737-800s to boost its future expansion. But in the same year, 2010 the founder Ajay Singh left the airline and was
taken over control by other founders.

SpiceJet quickly hit and tally up losses in 2012 due to the rise in price of oil and faced scrutiny from regulators over safety
concerns. In 2012, with Maran in command, the airline recorded a loss of around Rs.6.06 billion, which went upto to Rs.10.03
billion by the year 2014. SpiceJet returned back 15 of its Boeing 737 aircraft to reduce in the maintenance costs; it defaulted on
salary payments and dues like taxes, fuel charges, terminal fees. The airline faced a “cash crunch” after clearing liabilities of
about Rs. 4 billion towards income tax and service taxes. By the end of 2014, SpiceJet losses pushed it within days of bankruptcy.
It was a period the airline was losing planes and securing loans were getting harder. However, the carrier made a series of
changes in 2015 to remain afloat and once again gain a major presence in the market. This change was helmed by the savvy and
politically connected Ajay Singh, who took over a major share of SpiceJet again and became MD.
After a few years, SpiceJet was flourishing again. In 2017, SpiceJet doubled down on the 737 MAX and purchased a huge 100
more aircraft. In total, the airline now holds 206 orders for the MAX, of which only 13 were delivered before its grounding in 2019.
 TURNING INTO FAMILY BUSINESS
According to a Hindustan Times report, the main mistake the Kalnithi Maran owned airline did was
replacing all its top management executives with family members and turned it into a ‘family
business’. To cut down expenses they decided to forego well-placed and knowledgeable executives,
as they were too expensive.
s had been pumping money in the airline at regular intervals, it incurred losses steadily. Mohan
Ranganathan, aviation analyst and member of a government-appointed safety council was quoted by

WHAT LED news agency ‘Livemint’, saying “When you bring in a CEO with much hype and your losses are double
the sum pumped in to prop up the airline, any promoter is likely to lose patience. SpiceJet started off

SPICEJET
well and drifted off due to poor management. The change of guard didn’t help.” (Shukla, 2013)

DOWN? TO MAXIMISE PERFORMANCE

Spice Jet would run too many flights with very less number of planes. They ran over 1000 flights with only
57 planes to do the job. Even to become the prime mover, spicejet started airline to cover the
unchartered territories .But, this strategy didn't worked well from the planning stage itself.
 BUYING OF BOMBARDIER Q400
Spice Jet, in an error of judgement in hindsight, preferred to buy Bombardier Q400 aircraft, a small
aircraft to connect to smaller regions. However, the Bombardier Q400 is a very expensive aircraft and
the airline should have probably opted for usual propeller planes that most other airlines go for.

WHAT LED
AGGRESSIVE DISCOUNT FARES
factor again was its eagerness to follow aggressive discount fares in hopes of increasing passenger load.

SPICEJET
But, it wasn’t to be as they failed to lure the number of passengers to sustain its revamped business
model. The price-fare war hurt them badly. It still works if an airline makes the revenue on a flight to match
costs.

DOWN?
STACKING UP DEBTS
The airline kept a tab with its oil suppliers as well as the Airport Authority for years, stacking up its debts
without implementing any effective strategies to repay them.
TURNAROUND OF SPICEJET

SpiceJet came up with revival plan and submitted its proposal of revival plan to the Ministry of Civil Aviation in December 2014. The plan that envision PE investors
bringing in a major chunk of money while Singh took management control.

The CEO of SpiceJet, had submitted a 'Scheme of Reconstruction and Revival,' to the Civil Aviation Ministry in the presence of Singh. The board approved the Scheme of
Reconstruction and Revival in January 2015. The plan engrossed on infusing money, clearing dues, cost reduction, fleet size reduction, operational efficiency improvement
and rationalization of employees. With the approval, Singh took over the airline for the second time with a new team.
Top-level salaries were reduced by around Rs.200 million per year.
On the customer front, Singh started offering massive discounts and cutting non-profitable flying routes.
To bring down costs, he renegotiated maintenance and engineering contracts for SpiceJet aircraft.
On-time performance (OTP) was another area he immediately focused on.

These activities led to SpiceJet increasing its passenger load factor by 93.4% in July 2015 from 80.0 % in January 2015. SpiceJet leveraged its IT and Customer
Relationship Management systems. Routes were improved and re-priced, which allowed the airline to fill seats. Branding and positioning were changed to stimulate demand
in the youth segment; each plane was named after an Indian spice. A new logo and “Red Hot” slogan using red and turmeric colors signified energy, besides being
associated with Indian culture.

“We have been through a phase where it was tough to survive,” Singh said. “Now that we have gotten over that phase, it’s a year of consolidation. We need to make sure
that we are solid; our balance sheet is in strong shape. We need to make sure that we can grow in a profitable manner. It’s important that we don’t grow to grow market
share but in a manner that we continue to make larger profits.” SpiceJet started competing on punctuality, not just fares. For the month of February 2016, SpiceJet was at
the top recording On-Time Performance of 81.1% .
EXPECTED TURNOVER OF SPICE JET
SLIDING TOWARDS UNEXPECTED LOSS.
Spicejet reported a net loss of RS. 562 crore for the quarter ended september. The company accounts net loss due to sharp rise in operating cost.
Mainly driven by fuel expenses, jet fuel surged 120% year on year to RS. 615 crores for the company followed by a rise in aircraft lease rentals.
Unlike 2015, SpiceJet now has to deal with high oil prices. Global crude prices have shot up from $52.05 a barrel on 31 December, 2020 to
$72.17 a barrel by 26 July. Aviation turbine fuel (ATF) or jet fuel constituted about a fifth of total costs in 2020-21 and it may shoot up further
this year.

it is said that the company's business operations continued to be significantly impacted due to the second wave of covid-19 which continued to
impact travel demand negatively.

Protest by SpiceJet engineering staff has now spread all over the country with staff at nine key airports protesting over ‘restoration of salaries
and leaves’. The move is set to impact flight operations of the airline.
Singh executed an astute strategy aided by declining oil prices that led to several quarters of profits. For a while it seemed like he had managed
to steady the ship. But now, after two waves of the covid-19 pandemic that has battered the aviation sector around the world, and oil prices
soaring, it’s testing times yet again for SpiceJet.

SpiceJet posted its fifth consecutive quarterly loss of ₹257 crore in the three months ending March 2021, although that doesn’t reveal the full
picture, as we shall see momentarily. In 2020-21, the company lost ₹1,029.89 crore, up from a loss of ₹936.57 crore in the previous year.
Revenues dived 54% to ₹6,119.39 crore last year.
CONTD.......

Besides jet fuel, the firm is also dealing with a clutch of legal cases.
Aircraft manufacturer De Havilland Aircraft has moved the Delhi high court to enforce an award from a UK court. The award comprising $42.9
million in damages came after the aircraft maker dragged SpiceJet to court over alleged payment defaults following the delivery of Q-400
turboprops.
Irish aircraft lessor Goshawk and Asian leasing firm BOC Aviation that have dragged SpiceJet to UK courts for defaulting on lease payments.
Also fighting a dispute with the Marans—the Supreme Court had in November 2020 stayed a Delhi high court order asking SpiceJet to deposit
around ₹243 crore as interest related to a share transfer dispute with the former promoter.

SpiceJet is also facing stiff competition in the sector. Deep-pocketed rivals and domestic market leaders such as InterGlobe Aviation can drive out
competition in certain routes by discounting ticket prices. Both domestic airlines, as well as international carriers, are expected to roll out heavy
discounts to make up for the smaller passenger numbers today. “SpiceJet, which commands a 9%-12% market share, continues to face challenges
that can be traced to cash-flow, costs, and the lack of a clear path to profitability," Satyendra Pandey, managing partner at aviation advisory firm
AT-TV, said.

Ajay Singh stated that the company is looking forward to inducting additional Boeing 737 MAX aircrafts to improve efficiencies and and reduce cost.
 key activities customer
key partners Value Customer
Operations relationship
Investors Maintenance Of Fleet Proposition Segments
Customer Service Personal Valet At Airport.
Aircraft Marketing Lowest price air Personal and exclusive Cost Conscious
Manufacturers Passenger Assistance tickets by Spicejet lounges
Passengers
ATC Catering Award wining web portal
Onboard luggage with efficient Three course meal Lower Middle
Fuel Supplier Engineering services Baggage assistance Class / Middle
Travel agents Routing Inflight entertainment
SpiceJet keeps Class
Tripfactory and New Products & Services Spicemax
customer service Spice connect The premium class
EaseMyTrip
flying high during of train travellers,
Inflight Food
Companies Covid-19 times business people
Gas, Water & Key resources Channels and corporate
Electricity Suppliers Engineering Website employees.
National & employees Mobile App
International Sales/Marketing stuffs Travel agencies
Customer service stuff Social Networking
Regulators
Fleet Social Media
Ground Staff Flyer Loyalty Program
Email
Offline advertising

Cost Structure Revenue Streams

Aviation Turbine Fuel Inflight food & Beverages Ancillary revenue - sale of food and beverages AD spaces sale
Lease Charges Aviation insurance air miles and merchandise, Spicejet Cargo revenue
Landing, Navigation & other airport charges Cargo handling cost charges for seat selection Fleet sales revenue
Airport repair & maintenance Taxes use of lounges,
Aircraft navigation Software expenses Promotional Marketing expenses advertising on aircraft products.
Infrastructure Maintenance Staff Compensation
BIBLIOGRAPHY