Friday, June 30, 2017

Introducing the biggest airline you've never heard of

It has been quite a turnaround for SpiceJet. In December 2014 the low-cost Indian airline was on the brink of collapse following five consecutive years in the red (culminating in an annual loss of $159m - £122m - for that year). It was even forced to cancel more than 2,000 flights because it hadn’t paid its bills and oil companies were refusing refuel its planes.

Since that nadir, however, it’s stock has risen more than 800 per cent, giving it a market value of $1.2 billion (£0.9bn). According to Bloomberg, no airline on the planet is performing so strongly. And this week, after it had announced an order for 100 Boeing aircraft, SpiceJet earned praise from none other than Donald Trump, who thanked it for safeguarding US jobs.
Bloomberg highlighted the good work of “white knight” chairman Ajay Singh for “cutting loss-making routes and aggressively adding capacity in one of the world’s fastest growing markets”.
The fact that oil prices have remained low for the last few years has helped, of course. Indeed, airlines around the world have never had it so good. Ryanair recently announced a pre-tax annual profit of €1.3bn (£1.1bn). Even the parent company of British Airways, IAG, recorded operating profits of €170m (£144.6m) for the first three months of 2017 – and that’s despite a succession of controversies for the UK airline.
It’s still relatively small, with a fleet of just over 50 aircraft, mostly Boeing 737-700s, 737-800s (the model favoured by Ryanair), and 737 MAX 8s, but with a few smaller Bombardier Dash 8s thrown in for good measure. It handled around 14 million last year, up from 11.7 million in 2015.

That’s small fry compared to the world’s biggest low-cost airlines.
But it’s growing fast

The fresh order for 100 Boeing jets that had Trump purring means SpiceJet is now waiting on 142 Boeing 737 MAX 8s. The first will be delivered next summer. So expect the carrier to be a fixture for some time yet.
The potential for growth in India really is staggering. The country’s population stands at at more than 1.32 billion, and it is projected to overtake China (which has 1.38 billion residents) by 2022. Airlines have been rushing to cater to its growing middle class, and a clutch of carriers have been established in the last decade or so (many more launched but have since failed). The most successful has been IndiGo, which in 11 years has gone from start-up to low-cost behemoth, with 138 jets, 46 destinations and more than 41 million annual passengers. But there are others that will have you scratching your head.
29/06/17 Oliver Smith/Telegraph