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Men in Suits


SpiceJet, a low-cost carrier, is amongst India’s top three airlines by market share. Flying for SpiceJet however has been turbulent for many years. This is not the first airline grappled with financial issues but many airlines such as Kingfisher and Jet Airways have faced a financial and existential crunch in the past.

The carrier reported losses of ₹1,003 crore in FY 2013-14. It was on the verge of shutting down its operations in 2014.

The year 2014 for SpiceJet

The airline was in a crisis from all directions. It was having a severe liquidity shortage because of which its fuel purchase capacity was lost. Fuel companies were against providing credit lines to SpiceJet as it was badly debt-ridden. It had no money to pay the salaries of its employees due to which it laid off several employees. The carrier had already cut down its fleet to half. It could not pay airport duties and taxes. This situation led to a number of flight cancellations. The number of pilots were reduced from 400 to 268. Such a crash-landing of SpiceJet was a result of many reasons.

The factors that landed the airline in debts are-

1. Bombardier Q400

All airlines today and even back then had Boeings or Airbuses. Boeings are said to be cost-effective. In 2010 as part of its strategic decision to expand the airline’s operations in tier 2 and tier 3 cities in India, SpiceJet ordered 15 Bombardier Q400 aircrafts. These bombardier aircrafts were pretty expensive and cost around $450 million. Not only were the purchase costs of these aircrafts high but their maintenance costs were also hefty. This decision later turned out to be one of the worst decisions of SpiceJet as it only increased the company’s debt heavily. The total debt of SpiceJet which was ₹55 crore in 2010-11 jumped up to ₹855 crore in 2011-12 and its net worth dropped to a negative ₹147 crore from a positive ₹321 crore after this decision. And this debt further doubled in the next financial year.

2. Management failure of Mr. Kalanithi Maran

The founder and Chairman of Sun Group, Kalanithi Maran, who is a media tycoon took 58% shareholding in SpiceJet in 2010 by investing around ₹1500 crore. To bail out the company from heavy losses, the carrier sought help from American private equity investors. Many such investors including Indigo Partners and TPG Capital showed interest to invest in SpiceJet. However, the streak of bad luck continued for the airline even during this period. Just at the time when other investors were about to invest in the airline, news of CBI investigating Dayanithi Maran, who is the brother of Kalanithi Maran, for charges of misconduct in the Aircel-Maxis case popped up. This prompted potential investors to step behind the investment.

Entry of Ajay Singh

The present promoter and chairman, Ajay Singh, gave new hopes to the airline company when he tried to be back as a saviour in 2014 after five years. Back in 2010, he sold the airline to Kalanithi Maran. The focus of Ajay Singh after coming back was to revive the situation and bring bright days back for SpiceJet. He tried to pull the company out of a pile of debts by settling dues worth ₹2,200 crore. The government also lent a helping hand to the airline. The aviation ministry requested oil companies and the Airport Authority of India to facilitate credit to SpiceJet. Ajay Singh personally started visiting oil companies and convinced them to work with SpiceJet after partly settling their payments. The decrease in oil prices during this period also helped the airline in its revival because jet fuel constitutes nearly 40% of an airline’s operating cost.

Singh’s action plan included covering all prime destinations in India with a limited fleet, regaining the trust and confidence of customers, uplifting employee morale and recovering losses at the earliest. In order to gain a competitive edge over other market players, SpiceJet opted for a competitive pricing strategy. It slashed its prices in comparison to other airlines’ price tickets and offered decent services to passengers.

The strategies rolled out by Ajay Singh definitely worked wonders for the carrier. SpiceJet, which was valued at ₹650 crore in 2014, considerably rose up to ₹7,400 crore in 2017.

The Pandemic

The pandemic nearly halted the entire aviation industry for several months which again led to the accumulation of losses for airlines. Even after the passage of several months, airlines began to operate very restrictively because of government regulations and worldwide travel bans. The airline industry was in dire straits and SpiceJet who had just come out of turbulence was again pushed into a financial storm.

Post-pandemic threats

The enormous rise in the price of ATF (Aviation Turbine Fuel) in 2021 and 2022 made things worse for SpiceJet. In the financial year 2021-22, SpiceJet recorded losses of ₹1725 crore. The first quarter of FY 2022-23 witnessed losses of around ₹783.60 crore. The same cycle of events that took place back in 2014 started rolling out again for the company. Unable to handle this financial fiasco, the Chief Financial Officer of SpiceJet, Sanjeev Taneja resigned from the company.

Instances of mechanical failures in the past year heightened customer distrust in the airline. The carrier had been in the news in 2022 for all the wrong reasons. The reasons ranged from numerous emergency landings to facing engine-related malfunctions to windscreen cracking mid-air. People have been deliberately avoiding flying by SpiceJet owing to all the negativities.

Due to lack of funds to purchase the requisite fuel at a high price, SpiceJet was left with no option but to cancel hundreds of flights. This was another major reason for passengers to not choose SpiceJet to travel, owing to a fear of flight cancellation.


The airline industry is definitely not easy to survive in. If there is something that could bring the company back on track, it is a substantial capital infusion. The survival of SpiceJet is dependent on the game plan of Ajay Singh. It will be interesting to witness if he will be able to turn around the situation as he did back in 2014.

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