Re-Fuelling for growth

Last week no less an investor than the Tata Group decided to back the Gurgaon-based low cost carrier (LCC) Spicejet. Others who were willing to bankroll the fledging airline, which took off in May 2005, included the Texas Pacific Group, Goldman Sachs and Istithmar.
Together they have agreed to pump in $ 80 million, a handy sum at any time. The last two investors are already stakeholders having betted $92 million on the airline earlier this year.
That helped the company pay for the planes that it has ordered. Says Chief Executive Officer, Siddhant Sharma, "We've paid for the aircraft. This money will be used to beef up infrastructure at the new airports where we plan to operate and for working capital.” Starting next week, Spicejet will fly two new routes -- Jaipur-Mumbai-Chennai and Mumbai-Ahmedabad-Hyderabad, taking the total number of routes to 16.
It's creditable that Spicejet has found takers for its equity at a time when the industry’s not exactly in the pink of health. And that's because the airline has followed the no-frills model without any compromises: it uses just one kind of aircraft, the Boeing 737.
Deccan Aviation, on the other hand, flies both Airbuses and turboprops (ATRs) which means more expenses on engineers and larger inventories.
17/12/06 Shobhana Subramanian/Business Standard

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