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SpiceJet

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SpiceJet
IATA ICAO Callsign
SG SEJ SPICEJET
Founded2004
Commenced operations24 May 2005
Hubs
Secondary hubs
Focus cities
Fleet size48 (+23 orders)
Destinations38 Indian and 4 international
Parent companySun Group
HeadquartersChennai[2]
Key peopleKalanidhi Maran, Chairman
Neil Mills, CEO
RevenueIncrease US$562.51 million
(see below)
ProfitIncrease US$19.21 million
WebsiteSpiceJet.com

SpiceJet is a low-cost airline headquartered in Chennai, India owned by Kalanithi Maran.[2] It began service in May 2005 and by 2012, it was India's third largest airline in terms of market share ahead of Air India, Kingfisher Airlines and GoAir.[3]

History

Early years

ModiLuft logo

The origins of SpiceJet track back to February 1993 when ModiLuft, one of India's first post-deregulation airlines that was launched by the Indian industrialist S K Modi, in technical partnership with the German flag carrier Lufthansa. The airline project was started in February, 1993 by S K Modi, Ashutosh Dayal Sharma and Kanwar K S Jamwal and on 5 May 1993 took the first flight from New Delhi to Mumbai. The airline actually started operations within three months of its conception – a record of kinds in itself. It maintained very high standards in flight safety, ground maintenance and on-time performance, owing to a strong support from Lufthansa AG. The team consisting of Indian and German technical staff and pilots was built by Kanwar K S Jamwal, General Manager Projects, a thorough professional himself, was responsible for setting up the Airline and its operations. Captain R L. Kapur and Retired First officer Cdr. S. Raj along with a team of able Airline experts helped further, in meeting the highest standards in the aviation industry and in conforming to the Indian Aircraft Rules set by the Director General Civil Aviation. The first two batches of the cabin crew were extensively trained at the flight crew training facility at Frankfurt. Modiluft was perhaps the only Airline to achieve an average aircraft utilisation of a minimum 12 hours per day in Indian Skies. This was no ordinary feat, as it required constant supervision, resources and a team of thorough professionals at every level to make this possible.

Emergence as SpiceJet

ModiLuft was the only airline in India to fly a three class configuration compared to others airlines, It had a First, Business and an Economy Class and an incident free track record of flying. It used Boeing 737-200 aircraft leased from Lufthansa. ModiLuft did not last very long specially because the business parity of the German and Indian partners was not the same and problems arose. Then the cooperation was broken off and ModiLuft acquired Boeing 737-400 aircraft to replace the 737-200s from Air U K, but the future of ModiLuft was already sealed and the airline ceased operations in 1996. However, the air-operating certificate (AOC) of ModiLuft did not lapse and the airline due to lack of funds changed hands and renamed Royal Airways. In 2004, management of the airline was taken over by Ajay Singh, who renamed the company, raised funds and restarted operations. Thus, was born SpiceJet following the low cost model.[4] SpiceJet leased 3 Boeing 737–800 Next Generation jet aircraft. SpiceJet chose to buy in modern Boeing NGs after a year long research and study.[5] On 7 March 2005, the Airports Authority of India approved three overnight parking slots (for aircraft) to SpiceJet, with two in Delhi and one in Mumbai. They announced that flights will commence in May after the first of the 30 Boeing 737–800 aircraft arrive in April.[6] SpiceJet opened bookings on 18 May 2005 and results followed immediately as over 37,000 were booked out in just one day, setting a new record in the Asian continent. Red Hot Special Fares were introduced ranging from ₹99 (US$1.20) to ₹799 (US$9.60).[7] The first flight was flagged off by the Union Minister of Civil Aviation, Shri. Praful Patel. The first Boeing 737–800 aircraft left Delhi for Mumbai via Ahmedabad on 24 May 2005.[8] It was very successful and by 2008, it was India's second-largest low-cost airline in terms of market share. On 15 July 2008 billionaire Wilbur Ross suggested he would invest ₹345 crore (US$41 million) in the airline. SpiceJet accepted an offer in principle from a US-based private equity firm that would make these funds available. Indian media baron Kalanidhi Maran acquired 37.7% in the business in June 2010.[9][10] After completing 5 years of flying, SpiceJet was allowed to commence international flights by the Airports Authority of India on 7 September 2010. Spicejet launched flights from Delhi to Kathmandu and Chennai to Colombo. The first international flight took off on 7 October 2010 from the Delhi airport.[11] On 9 December 2010, Bombardier Aerospace announced that SpiceJet placed a firm order for 15 Q400 NextGen turboprop airliners and has also placed an option to buy another 15 of those. SpiceJet used their fleet of Q400's for short-haul operations.[12]

Q400 era

File:ChangiSpice2012.jpg
A newly built Bombardier Dash 8 Q400 sits on the tarmac of the Singapore Changi Airport during the 2012 Singapore Airshow

In April 2011, SpiceJet announced that they chose Hyderabad's Rajiv Gandhi International Airport as the first and primary base for its new fleet of Bombardier Q-400 NextGen aircraft. From Hyderabad, SpiceJet launched flights to Aurangabad, Bhubaneswar, Goa, Indore, Madurai, Mangalore, Nagpur, Nasik, Raipur, Rajahmundry, Tirupati, and Vijayawada with the new fleet.[13] On 12 January 2012, SpiceJet's fleet went up to 40 as Boeing delivered a brand new 737–800 aircraft. SpiceJet announced on its website that they would be launching flights on Surat – Delhi and Surat – Mumbai routes following several requests from the carrier's fans on the social media network Facebook. Around 6 days later, SpiceJet's market share rose by 2.5% after the aviation and finance ministries announced that foreign carriers can now buy up to 49% stake in Indian carriers, including the national flag carrier Air India.[14] In early 2012, SpiceJet suffered from a loss of over ₹39 crore (US$4.7 million) as fuel prices were reported to have jumped up by as high as 90%. The money that SpiceJet spent on fuel has exceeded well over 50% spiraling the airline into losses.[15] As of 2011, Spicejet owed the state Rs. 366 million for availing airport facilities[16]

On 9 January 2012, the Directorate General of Civil Aviation, reported that several airlines in India, including SpiceJet, have not maintained crucial data for the flight operations quality assurance or the FOQA.[17] The Bombay stock exchange later announced that ever since June 2011, Spicejet had been suffering losses in millions of rupees. BSE reported that SpiceJet suffered a loss of ₹719.64 million (US$8.6 million) in March–June, ₹2,400.67 million (US$29 million) in June–September and ₹392.60 million (US$4.7 million) in September–December. The airline's quarterly income also went down in June–September 2011, but somehow the airline managed to pull its income up to ₹11,758.34 million (US$140 million) by December in order to recoup cumulative losses.[18] Despite the losses, Kalanithi Maran doubled his stake in Spicejet to 16% by investing ₹100 crore (US$12 million) in the airline. Maran believed that SpiceJet was going through financial distress because of the steadily rising costs of Jet fuel. The airline's market share at the time was a little over 16% making it the fourth largest airline in India. Neil Mills said that the airline was making preparations so as to directly import jet fuel reducing operational costs.[19]

Destinations

Main article: SpiceJet destinations

Fleet

SpiceJet fleet
Aircraft In Service Orders Options Passengers
(Economy) 		Notes
Boeing 737–800 30 20 — 189 5 dry leased, 22 owned
New deliveries since December 2010
Boeing 737-900ER 6 — — 212
Bombardier Dash 8 Q400 12 18 78 New deliveries since August 2011
Total 48 38 15

In November 2010, SpiceJet finalised their order for 30 Next-Generation Boeing 737-800s with winglets in the presence of the American president, Barack Obama. Neil Mills, the chief executive officer of SpiceJet said "We are extremely satisfied with the Next-Generation 737 – an airplane that is reliable, allows for greater efficiency in maintenance and supports the business plan for low-cost carriers."[20] Again on 9 December 2010, SpiceJet made a firm order for 15 Bombardier Dash 8 Q400 and took options to purchase a further 15. The firm order is valued at approximately US$446 million as of now and can go up to US$915 million if the 15 options are finalised.[12] Each aircraft in the SpiceJet fleet is named after a spice[21][22] Currently, SpiceJet owns 40 aircraft with an average age of 4.6 years.[23] SpiceJet sold five of its old Boeing 737–800 to other operators on receiving new ones. One of the five was SpiceJet's own which is now in the possession of Somon Air.[24] During February 2012, SpiceJet announced that they would take the delivery of 10 more aircraft during 2012 out of which 7 would be the Bombardier Q400.[25]

Pricing policy

A SpiceJet aircraft boarding without a Jet bridge to reduce turnaround time

The price policy of SpiceJet is usually very dynamic, with discounts and tickets in promotion. Like other carriers, even if the advertised price may be very low, it often does not include charges & taxes. As many as ten percent of the seats on any flight are offered at the lowest price, and are the first to sell. The prices steadily rise thereafter to a point where they can be comparable or more expensive than a flight on a full-service carrier like Air India. Aircraft often operate with a minimum set of optional equipment, further reducing costs of acquisition and maintenance, as well as keeping the weight of the aircraft lower and thus saving fuel. Pilot conveniences may be excluded such as ACARS,Dual FMCs. Often, no in-flight entertainment systems are made available. SpiceJet often offers simpler fare scheme, such as charging one-way tickets half that of round-trips. Typically fares increase as the plane fills up, which rewards early reservations. Often, SpiceJet flies to smaller, less congested secondary airports and/or fly to airports in off-peak hours to avoid air traffic delays and taking advantage of lower landing fees. SpiceJet tends to offload, service and re-load the aircraft (turnaround) in shorter time periods, allowing maximum utilisation of aircraft.

Common practices

SpiceJet operates aircraft configured with a single passenger class. SpiceJet has a disinclination to handle Special Service passengers, for instance by placing a higher age limit on unaccompanied minors[26] than full service carriers. SpiceJet offers no refunds or transfers to later flights in the event of missed flights; if the aircraft leaves on time without a passenger who arrived late, he will have to buy a wholly new ticket for the next flight.

SpiceJet Cargo

Along with passenger services, SpiceJet also offers cargo services on the same flights. The service is available on flights connecting Ahmedabad, Agartala, Bagdogra, Bangalore, Chennai, Coimbatore, Delhi, Goa, Guwahati, Hyderabad, Jaipur, Kochi, Kolkata, Madurai, Mumbai, Pune and Visakhapatnam. Between 2 to 3.5 tons of cargo is ferried on each flight ensuring maximum utilisation of the aircraft.[27]

Awards and achievements

SpiceJet has won the following awards for its excellent service across the Indian airspace.[28]

  • Smart Travel Asia’s Top 5 Best Budget Airlines in Asia (Aug 2010) and in Top 10 list for 2 consecutive years (Aug 2008 & Sept 2009, Hong Kong)
  • Outlook Traveler’s Best Low Cost Airline (Feb 2008 & Feb 2010)
  • Award for Best Website at ‘World Low Cost Airlines Asia Pacific Conference’ (January 2010, Singapore)
  • India’s best low-fare airline in a survey conducted by MaRs on behalf of Hindustan Times (December 2009)
  • World Travel Market Award for multi-channel approach in distribution (November 2009, London)
  • National Award (ICWAI) for excellence in Cost Management (March 2009)
  • CIO 100 Award for IT efforts for customer satisfaction and business growth (2007, 2008, 2009 & 2011)

Revenue

Revenue by year
Year Trend Total Income Reference
2000 Steady ₹5.37 million (US$64,000) [29]
2001 Increase ₹16.32 million (US$200,000) [30]
2002 Increase ₹37.6 million (US$450,000) [31]
2003 Decrease ₹16.08 million (US$190,000) [32]
2004 Increase ₹41.46 million (US$500,000) [33]
2005 Decrease ₹38.7 million (US$460,000) [34]
2006 Increase ₹4,531.47 million (US$54 million) [35]
2007 Increase ₹7,482.79 million (US$90 million) [36]
2008 Increase ₹14,385.79 million (US$170 million) [37]
2009 Increase ₹18,819.79 million (US$230 million) [38]
2010 Increase ₹22,420.91 million (US$270 million) [39]
2011 Increase ₹29,606.04 million (US$350 million) [40]

References

  1. ^ SpiceJet News
  2. ^ a b "SpiceJet Contact Information | Offices | Customer Relations | SpiceJet Airlines". Spicejet.com. Retrieved 14 September 2010.
  3. ^ Nair, Vipin V. (4 July 2008). "SpiceJet Rises in Mumbai on Report of Kingfisher Deal (Update2)". Bloomberg. Retrieved 30 August 2010.
  4. ^ "Company History – SpiceJet". moneycontrol.com. Retrieved 30 December 2011.
  5. ^ "SPICEJET SELECTS BOEING". SpiceJet. Retrieved 30 December 2011.
  6. ^ "SpiceJet gets AAI approval for parking slots in Mumbai and Delhi". SpiceJet. Retrieved 30 December 2011.
  7. ^ "SpiceJet books 37,000 seats on day 1". SpiceJet. Retrieved 30 December 2011.
  8. ^ "Shri Praful Patel flags off SpiceJet". SpiceJet. Retrieved 30 December 2011.
  9. ^ 11 Jun 2010, 03.31 pm IST,AGENCIES (11 June 2010). "Kalanithi Maran to buy 37% stake in SpiceJet". The Economic Times. Retrieved 30 August 2010.{{cite web}}: CS1 maint: multiple names: authors list (link) CS1 maint: numeric names: authors list (link)
  10. ^ "Kalanidhi Maran buys 37.7 p.c. stake in SpiceJet". The Hindu. 13 June 2010. Retrieved 8 August 2010.
  11. ^ "SpiceJet to commence international operations. Booking opens for flights to Colombo and Kathmandu". SpiceJet. Retrieved 30 December 2011.
  12. ^ a b "Bombardier Sells 15 Q400 NextGen Aircraft to India's SpiceJet". Bombardier. Retrieved 30 December 2011.
  13. ^ "Hyderabad's RGIA to be a key base for SpiceJet's Q-400 operations". SpiceJet. Retrieved 30 December 2011.
  14. ^ "Jet Air, SpiceJet Rise in Mumbai on Foreign Investment Plan". Bloomberg Businessweek. Retrieved 23 January 2012.
  15. ^ "Fund infusion critical for SpiceJet". Business Standard. Retrieved 15 February 2012.
  16. ^ Spicejet owes Govt Rs 366 million
  17. ^ "IndiGo, SpiceJet airlines violate mandatory safety norms: DGCA". India Today. Retrieved 20 January 2012.
  18. ^ "Standalone Result – 31-Dec-11". Bombay Stock Exchange. Retrieved 2 March 2012.
  19. ^ "Marans to pump Rs 100 cr into SpiceJet, up stake to 48.6 pc". CNN-IBN (India). Retrieved 3 March 2012.
  20. ^ "Boeing, SpiceJet Finalize Order for 30 Next-Generation 737-800s". Boeing. Retrieved 8 November 2010.
  21. ^ "CH-Aviation – Airline News, Fleet Lists & More". Ch-aviation.ch. Retrieved 30 August 2010.
  22. ^ "SpiceJet – Details and Fleet History – Planespotters.net Just Aviation". Planespotters.net. Retrieved 30 August 2010.
  23. ^ SpiceJet fleet list at planespotters.net Spicejet aircraft list
  24. ^ Thomas Noack. "SpiceJet's historic fleet". planestoppers.net. Retrieved 21 January 2012.
  25. ^ "Auditors cast doubts on SpiceJet's ability to stay afloat". Bennett, Coleman & Co. Ltd. Retrieved 15 February 2012.
  26. ^ Definition of unaccompanied minors
  27. ^ "SpiceJet Cargo Services". SpiceJet. Retrieved 19 January 2012.
  28. ^ "SpiceJet now flies to Tuticorin – Connects with Chennai using Q400 aircraft". SpiceJet. Retrieved 30 December 2011.
  29. ^ "Standalone Result – 31-May-00 – BSE". Bombay Stock Exchange. Retrieved 31 December 2011.
  30. ^ "Standalone Result – 28-Feb-01 – BSE". Bombay Stock Exchange. Retrieved 31 December 2011.
  31. ^ "Standalone Result – 31-May-02 – BSE". Bombay Stock Exchange. Retrieved 31 December 2011.
  32. ^ "Standalone Result – 31-May-03 – BSE". Bombay Stock Exchange. Retrieved 31 December 2011.
  33. ^ "Standalone Result – 31-May-04 – BSE". Bombay Stock Exchange. Retrieved 31 December 2011.
  34. ^ "Standalone Result – 31-May-05 – BSE". Bombay Stock Exchange. Retrieved 31 December 2011.
  35. ^ "Standalone Result – 31-May-06 – BSE". Bombay Stock Exchange. Retrieved 31 December 2011.
  36. ^ "Standalone Result – 31-Mar-07 – BSE". Bombay Stock Exchange. Retrieved 31 December 2011.
  37. ^ "Standalone Result – 31-Mar-08 – BSE". Bombay Stock Exchange. Retrieved 31 December 2011.
  38. ^ "Standalone Result – 31-Dec-08 – BSE". Bombay Stock Exchange. Retrieved 31 December 2011.
  39. ^ "Standalone Result – 31-Mar-10 – BSE". Bombay Stock Exchange. Retrieved 31 December 2011.
  40. ^ "Standalone Result – 31-Mar-11 – BSE". Bombay Stock Exchange. Retrieved 31 December 2011.

External links

Wikimedia Commons has media related to SpiceJet.
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