SpiceJet’s co-founder Ajay Singh seemed surprised that someone would even ask what was going through his mind when, in December 2014, the Indian low-cost carrier’s aircraft were grounded.
Fuel suppliers had refused to refill its planes for fear that they wouldn’t be paid. Thousands of its customers’ holiday plans had been thrown into disarray and the carrier’s 5,000 workers were sent home, unsure of whether they would be paid the salaries they were owed. It was a bleak Christmas for all concerned and there were fears its planes would not take off again.
But at that stage, Mr Singh had not been involved with the management of the company for more than four years. He and his fellow investors had sold out to the media magnate Kalanithi Maran and his KAL Airways company, which had, observers said, made a mess of things. Strictly speaking, it was no longer his concern. But he did not see it that way.
"How would you expect me to feel? I felt terrible," Mr Singh told The National during a recent interview in Dubai. "Some of the mistakes that were being made at the time – it was obvious that they were mistakes. I couldn't do anything about it."
A month later, by mid-January last year, Mr Singh found himself back at the helm of the business after KAL Airways transferred its stake in the company back to Mr Singh and a group of investors that pledged to inject 15 billion rupees (Dh812 million) into the company.
“I’m just fortunate that I got a second chance. Not many people in life get a second chance. I did and I am trying to make the most of it,” he said.
Mr Singh seems to be doing a pretty good job. He has definitely been helped by falling fuel costs, the effect of which is compromised in India by heavy taxes.
But in his first 11 months in charge, the company has posted three profitable quarters and its share price has more than quadrupled from about 18 rupees a year ago to more than 80 rupees.
This has been done by overhauling its operations – cutting unprofitable routes, boosting capacity on more popular destinations and making sure its planes fly more efficiently. SpiceJet aircraft now spend an average of 13 hours per day in the air, compared with an industry average of 10 to 12 hours.
The number of its flights landing on time has increased to 87 per cent from a meagre 50 per cent and passenger load factors have risen to 91 per cent from 80 per cent.
Since April last year, SpiceJet has claimed the highest occupancy rates of any Indian airline.
Mr Singh says the business has benefited from “a lot of personal attention and motivation”. He said: “I think people needed to see that we meant business, and we will address problems – that we will behave honourably when there is a crisis.”
He acknowledges that his turnaround efforts have received “a lot of goodwill” from all stakeholders.
“Nobody really wanted to see this airline go down. I think the government of India didn’t want to see the airline go because they had already seen one airline [Kingfisher] go down, and that was a very painful affair.
The customers did not want to see it go down. The employees – many of whom were people that I had hired when the airline started – were extremely passionate, and were willing to work very hard to keep the airline alive.
“I think the world as a whole supported us. The aircraft manufacturers supported us and the Indian media, which can be notoriously fickle – even those guys were on our side.”
He admits, however, that SpiceJet still has some way to go – particularly in terms of restoring its brand. “Under previous ownership, SpiceJet cancelled a very large number of flights. The worst of it all was that they cancelled flights in the holiday season [in 2014]. That upset a lot of people. It’s always a challenge to get those people back but I have been surprised at the pace at which they have come back.”
Moving forwards, Mr Singh has set some fairly ambitious growth plans for the company. A new SpiceJet Holidays travel agency business is being launched, and the company will offer visa processing services for passengers in a bid to boost customer retention rates. It has already increased the number of routes flown from 220 to 300, and is in talks with manufacturers as it prepares to order up to 150 new aircraft. These will help it to reduce costs.
Mr Singh plans to increase the number of routes SpiceJet offers through Dubai from eight to 15, and has added that he would like to set up a hub in the city. Two of these new routes – to Jaipur and Hyderabad – were announced yesterday and will begin operations on February 16.
“Dubai is a natural fit for us. There is great potential not only in terms of people visiting, but for people going back home to visit families, for people coming from India for work, but also for holiday – on both sides. I think that is significantly undertapped,” he said.
“We feel we are in a strong enough position to start planning for the next 10 years, and we think there is a fantastic opportunity in India. Just 2 per cent of people fly today, and India is the fastest-growing aviation market in the world.”
The latest figures from trade body the International Air Transport Association (Iata) for the 12 months to November 2015 show that passenger numbers in India grew by more than 25 per cent compared to the year-earlier period.
“With growth in the Indian economy at 7 to 8 per cent, more and more people have the resources to fly,” said Mr Singh. “And it’s aspirational. People want to shift to planes from trains – it makes them feel good and it’s convenient.”
But growth will not be without its challenges. India’s aviation industry is overregulated, according to a 2014 study by the accountancy company KPMG, and operators have to contend with high costs as a result of taxes on fuel and delays as a result of congestion due to an overburdened infrastructure.
A report last month by BMI Research stated that the lack of capital spending on the country’s 454 airports and airstrips – all of which are owned by the government – has hampered the sector’s potential.
“A historical lack of large capital expenditure plans for the sector, uncertainty surrounding airport privatisation plans and land disputes are factors that will continue to hinder growth in the sector, despite the large potential,” it said.
As a result, it forecast the airport sector to grow at 4.1 per cent between 2015 and 2019, below the 6.5 per cent average growth predicted for the country’s infrastructure market, and also below the 7.5 per cent growth rate forecast for India’s economy this year by the IMF.
Mr Singh, however, remains optimistic and he believes the staff for whom he showed so much concern when the company was in such dire straits a little more than a year ago will be the people to propel it through a new era of prosperity.
It’s a far cry from the days when he felt terrible about SpiceJet.
“I think what was missing was a lot of motivation. In a sense, people at SpiceJet had got used to losing. Now that they see they are succeeding, things are going well and they are being appreciated by the world, it’s a greatly energising and empowering feeling.”
mfahy@thenational.ae
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