SpiceJet Case
-
Upload
kalyankumar-podicheti -
Category
Travel
-
view
89 -
download
1
Transcript of SpiceJet Case
Spice Jet & It’s Survival
Indian Aviation1932- Tata Airlines1948-Air India1953- Nationalization 1986-Private Airlines permitted as a Air Taxi1991-Open sky policy1994- Private Careers permitted to operate
scheduled services2003-LCC
Spice Jet Spice jet is a low-cost airline based in New
Delhi. It began service in 23 May 2005. 340 flights; 48 DestinationsFleet size :53 aircraftTo 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.”
S.W.O.T
Strength Weakness Strong backing by the
PromotersLCC segment is ever
growing in the countryOne of the largest low
cost carriers in IndiaHas a reach to around
35 Indian destinationsGood 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
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
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
Reasons for downfallFrequent offers were not a good idea High airport charges, steep fuel cost hurt
most Global investors are shying away from
Spice JetPoor Administration Load factor
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%
Operational ErrorsGround OperationsI. BMAII. BBA RAMP OperationsI. Fueling II. ATC clearance Flight operations
SuggestionsThe 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.
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.
Last but not least..