Tuesday, February 14, 2017

We don’t do anything at the cost of profitability: SpiceJet CEO

Low cost airline, SpiceJet has had a remarkable run during the last two years posting eight consecutive quarters of profits. In an interview with BusinessLine, the airline’s CEO, Ajay Singh on the sidelines of the CNN Asia Business Forum meet, shares the way ahead and the challenges that confront the carrier. Excerpts:

Spicejet must be one of the few airlines which has had a successful turnaround. How much of money have you returned to the lessors, oil companies etc. so far?

An airline shutting down is a very bad thing not only for the airline but for the sector itself.

When we started the process of turning around the airline in 2015, we didn’t want to see a repeat of Kingfisher Airlines. We wanted to pay everyone whom we owed money.

So, we decided to resolve these issues head on. We told them that here is the plan; we asked them to believe us. What else could we do anyway? But we were happy they trusted us. We have also shown that we were worthy of that trust.

In the last two years, we have paid more or less everyone. We have totally paid back ₹2,000 crore.

No equity has been raised and no loans have been taken for the revival of the airline. The government provided us with moral support which actually helped us a lot.

The turnaround has actually been built on aggressive pricing; rapid expansion leading up to a huge order being placed with Boeing?

It was for us to get the costs down. We worked hard to renegotiate contracts, cut out unviable routes and at the same time get more frequencies on certain routes. You might feel the pricing might be aggressive but the actual fact is that the average fares have gone up and so have the yields.

Our average fares are probably higher than our nearest competitor. Our ancillary revenues which used to be around 6 per cent is now at 16 per cent.

You see, the model has remained the same but earlier it was bleeding and now we have had profits for the last eight quarters. So, a lot of hard work has gone into it to lower costs all around. The debt too has reduced considerably which is about ₹500 crore which is payment as usual.
13/02/17 K Giriprakash/The Business Line