After marked turnaround, SpiceJet talks growth

New Delhi, April 24 (IANS) India’s second largest budget carrier SpiceJet will go for a major fleet expansion and increase existing frequencies, after the dramatic turnaround from the brink of closure in just five quarters, chairman Ajay Singh has said.

The airline that saw its market share jump from 9.4 percent in January last year, just a month after what was seen as an imminent collapse, to 12.8 percent as of March this year, will also add some ancillary services like door-to-door cargo, while pitching for ground-handling for self and other carriers.

“Things are going well for us. We had a 92-percent-plus load factor for the last 10 months — the highest in the country. We also had the least cancellations among any airline in the country in the last six months,” said Singh in an interview to IANS.

“So, I think, the fact that so many people have come back to fly with us shows that the confidence they had lost in the airline has clearly come back,” he said, while also making it clear the focus will not be on adding new destinations indiscriminately.

The 50-year-old alumnus of IIT-Delhi said he was well aware that in the current fleet of 26 Boeing 737s, three A-320s/A-319 and 14 Bombardier Q400s, there are some aircraft the leases of which are due to expire soon. The aircraft were leased to minimise cancellations.

“It was always planned that these aircraft would go out at a point of time and would be replaced by dry-leased aircraft. That is what is happening,” Singh said, adding that some planes were wet-leased to address the short-term capacity shortage and to rebuild the network.

Currently, the airline has wet-leased aircraft that would be replaced with dry-leased planes by the end of next month. “The wet-lease expires in May and June. They will be replaced with some dry-lease ones. Importantly, there’ll be no operational disruption. Dry-lease saves money.”

Looking ahead, Singh, who also has a master’s in management from Cornell University, said once the operations gain significant traction, the focus will be on new aircraft. “We will then be in a position to actively engage both manufacturers and try and place an order,” Singh said.

This indicates that SpiceJet will evaluate both Boeing and Airbus for large aircraft. “We think a long-term order is required for SpiceJet, to ensure that we have steady deliveries at the right price for the next several years.”

He, however, made it clear it will not be a decision taken in haste. The airline’s fleet size during late 2014 stood at 55 before a financial crisis forced it to truncate it to 43 now. This includes smaller aircraft, as the carrier also sees growth in the regional segment.

“Once we are through with the order for the larger fleet, we will look into smaller fleet as well. Currently, we have 14 aircraft (Bombardier Q400s). With a new aviation policy, which encourages regional connectivity, we will look at that opportunity as well,” he said.

Industry insiders said several small aircraft makers have been in touch with SpiceJet.

On increasing the number of destinations, Singh said it will first focus on frequencies. “We will first increase the depth before we start increasing the breadth of our operations. This is in line with the low-cost culture of operations,” he said.

SpiceJet currently operates 298 flights daily to 40 destinations — 34 domestic and six international ones.

“In a low-cost culture, you have multiple flights to a single destination to bring costs down and we have significantly enhanced frequencies. We must grow, but we must also grow profitably. We must keep that in mind that what we do should make business sense.”

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