2. Indian Aviation
1932- Tata Airlines
1948-Air India
1953- Nationalization
1986-Private Airlines permitted as a Air Taxi
1991-Open sky policy
1994- Private Careers permitted to operate
scheduled services
2003-LCC
3. Spice Jet
Spice jet is a low-cost airline based in New Delhi.
It began service in 23 May 2005.
340 flights; 48 Destinations
Fleet size :53 aircraft
To become India’s most preferred low cost airline,
by providing the lowest air fares and the highest
consumer value to the price sensitive consumers
of the country.”
4. S.W.O.T
Strength Weakness
Strong backing by the
Promoters
LCC segment is ever
growing in the country
One of the largest low
cost carriers in India
Has a reach to around
35 Indian destinations
Good presence in the
market due to its
branding and
advertising
Low market share due
to presence of
significant competition
no international
destinations
Dependency on
leased assets
Small load deficiency
compared with
competitors
5. S.W.O.T
Opportunity Threat
Middle Class taking to
the skies
More opportunities to
grow on popular
routes and
destinations
International tie-ups
would boost brand
image and reach
Strong competition in
LCC segment
Rising Fuel Cost
Changing govt
policies
6. Spice Jet in to Shades
Kalanidhi Maran acquired 37.7% stake in Spice
jet in June 2010.
In 2012, Spice Jet suffered from a loss of over
INR390 million (US$6.1 million)
In 2012, Despite the losses, Kalanithi Maran
increased his stake in Spice jet by investing INR1
billion (US$16 million) in the airline.
50%-Discount
7. Reasons for downfall
Frequent offers were not a good idea
High airport charges, steep fuel cost hurt most
Global investors are shying away from Spice Jet
Poor Administration
Load factor
8. Operating Expense FY 2014 FY 2013
(Rs. In
million)
FY 2013
(Rs. In
million)
Variance
Aircraft fuel and oil 32,526.60 28,033.15 16%
Lease rental-aircraft, rotable and
engines
10,531.74 8,081.02 30%
Aircraft maintenance cost 9,932.53 6,737.56 47%
Aviation insurance 329.28 322.22 2%
Landing, navigation and other
airport charges
4,740.10 3,540.11 34%
Inflight and other passenger
amenities
534.50 523.96 2%
Operating software charges 741.84 571.03 30%
Aircraft delivery and re-delivery
costs
291.48 80.04 264%
Other operating expenses 453.91 215.67 110%
9. Operational Errors
Ground Operations
I. BMA
II. BBA
RAMP Operations
I. Fueling
II. ATC clearance
Flight operations
10. Suggestions
The Spice Jet can deal the financial distress by
disposing of real properties and may opt to sell
the property to pay the creditors so that working
capital of the companies will improve. The
Operating costs and other costs can be financed
by such activity.
The spice jet can reframe the terms and condition
with creditors to extend the credit period and the
new interest rate to save the company from
bankruptcy.
11. Continues..
The merger or strategic alliance can put the
distressed company back in good financial
position. The company can use its authorized
capital by offering the stake to foreign companies,
instead of adding leverages into capital structure.
Infusion of liquid assets can reframe the airlines.
Selling of fleet and avoiding operational
expenses.
