Spicejet: From clouds into clear skies

Now with a profit of Rs 61.4 crore in 2009-10 on revenues of Rs 2,181 crore, Spice Jet is in the black, commanding a marketshare of 12.6%. Indeed, this is the first time in the company's history that it has reported a profit; in 2008-09, it had posted a net loss of Rs 352.5 crore. But it has come a long way and between 2005 and now, the number of daily flights that are operated has nearly trebled, from around 50 to nearly140.
Even in 2008-09, when the Gurgaon-headquartered airline reported losses of Rs 352.5 crore, it seemed like a long haul. Consumer confidence was still low, but since mid-2009, things have been looking up. The carrier, which has a fleet size of 19 aircraft, flew as many as 6.6 million passengers in 2009-10. The only LCC that boasts of a higher marketshare is the Delhi-based Indigo that has cornered an impressive15.7% of the market. The Wadia-owned GoAir's share is just under 6%. Chief operating officer Sanjay
Aggarwal attributes the turnaround in the airline’s fortunes to two things: first to recovery in the economy and then to the manner in which the management reworked the utilisation plan for aircraft. He explains, “We have carefully designed flight profiles to reduce fuel burn.”
From the very beginning, Spice Jet had been clear that it would stay with one type of aircraft to keep both training and maintenance costs in check. Moreover, it has always leased aircraft for fixed periods of time—contracts are flexible and short-term in nature and typically for three to eight years—which has also helped keep expenses down.
08/06/10 Shaheen Mansuri /Financial Express

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Categories: SpiceJet Jun 2010