Friday, October 07, 2022

Free Falling: Will Cash-Strapped SpiceJet Follow Jet Airways’ Route?

Three years ago, India witnessed the crash of Jet Airways, one of its leading private airlines, owing to insurmountable financial troubles. Now, clouds of uncertainty seem to be hovering over SpiceJet as the low-budget airline is grappling to deal with its own money matters.

Today, SpiceJet, with no cash reserve, is walking a tightrope and is in dire need of fund infusion. Its daily operational loss has been mounting since the pandemic hit. While other players with deep pockets could withstand the onslaught, SpiceJet is still struggling with the price dilemma in a hugely price-sensitive market. 

Even with the festive season rolling in and things looking up for the aviation industry, cash-strapped SpiceJet is staring at a lean season as it is being forced to operate with a fleet half its strength over safety concerns which has only added to its woes.

So, what has brought the airlines, which looked promising around 2017-18, to its knees today? The answer lies in the company’s overambitious expansion plan, say aviation experts. Much like Jet Airways’. 

SpiceJet’s ambitions have come at the cost of profitability coupled with unforeseen circumstances such as Covid-19 and the grounding of Boeing 737 MAX, experts add.

In March 2019, after a global ban on MAX operations when two air crashes led to the death of 346 people, it had to ground 13 Boeing 737 MAX. Despite the setback, SpiceJet continued its aggressive capacity expansion plan and procured 30 Boeing 737 NG from Jet Airways.

07/10/22 Jeevan Prakash Sharma/Outlook

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