SpiceJet's Revival: Singh Is King

On 28 January 2015 SpiceJet put 500,000 seats on sale, bringing back its sales after a gap of three months. The message was that the airline was focused on staying afloat. This piece looks at SpiceJet under its returning king, Ajay Singh.

Why Ajay Singh came back

Two reasons were believed to be behind his return. Kalanithi Maran, who was weighing closing the airline, approached him to revive it. And oil prices were low while the economy looked set to grow. As a BJP man, he was also approached by the government to save the airline, because an airline going under would hurt the investment climate and raise airfares for the public.

The summer plan

The 2015 summer schedule, effective from 28 March, was planned at 280 daily flights with 26 Boeing 737s and 15 Q400s, a fleet of 41 with 39 active at any time, up from 16 Boeing 737s and 14 Q400s at the time. The commercial team opened bookings to October 2015 and offered 500,000 seats, boosting cash flow. Ajay Singh wanted to get back to a 35 aircraft Boeing fleet as fast as possible. That would be hard, since the airline did not have enough Boeing pilots for a fleet that size. Reportedly, by the end of March it would have pilots for only 15 Boeing 737s, as many were serving notice. He appealed to those pilots to reconsider.

The Q400s

On the Q400s, his priority was to press Bombardier and renegotiate so that the turboprop fleet became profitable, letting the Q400s stay longer and perhaps grow. He had never supported the Q400, but as earlier analysis on this site showed, the turboprops made good money and SpiceJet needed them to stand apart from a big player like IndiGo, by flying routes that narrow bodies could not serve commercially or technically. The only problems were maintenance and support. SpiceJet had received strong support from Boeing but was disappointed with Bombardier, which had apparently not dealt as fairly with the airline as it should have.

With money coming in, he aimed to renegotiate all the bad contracts that had been signed.

Pilots and culture

He wished to treat the pilots who had recently left as furloughed and bring them back as a priority. That would be hard on technical, emotional and legal grounds, especially for those already flying another type.

He wanted a cultural change, or rather a return to transparency between employees and senior management, with better employee and customer engagement and an aim of perfection in human interaction.

For example, COO Sanjiv Kapoor had told all employees he could be reached by email at any time, but others lower in the chain had broken that direct link. Operational staff who spoke to The Flying Engineer had vented their frustration at not being able to reach the COO directly. Ajay Singh had been made aware of unwanted forces in the airline and had started work to identify the negative and the passionate and separate them, to bring back the cleaner culture the airline began with in 2005.

Hot meals for crew had recently been resumed.

To build belonging and loyalty, he planned an employee stock ownership plan (ESOP). He reportedly told a group of employees that he wanted to see all of them owning a piece of SpiceJet.

Money

To reset the airline, he would put in money in three instalments, in February, March and April. He had already put some in, but that may have been an emergency infusion to deal with aircraft that lessors were looking to repossess.

He seemed to know what he was taking on. Sources quoted him saying there was plenty of mess on his plate with this acquisition, that it needed cleaning up, that it would take time, and that he was still discovering the problems at SpiceJet.

Who made the mess?

Few things are as frustrating as working for someone who does not grasp the basics of the business. Kaneswaran Avili, SpiceJet's CCO, had tweeted on 14 November 2014, the day of a board meeting, asking in exasperation why nobody understood RASK, very obviously aimed at the board.

SpiceJet was riddled with problems, most of them tied to being short of cash for a long time. Ajay Singh had been a director since selling his stake to the Marans in 2010 and had kept watch. He reportedly believed the cash crunch came from strategic decisions that went wrong in the early years after the transfer to the Marans, and from commercial decisions taken mainly in 2013 that caused a heavy cash burn the airline never recovered from.

Even so, he reportedly did not put all the blame on Maran, whose background had not prepared him for an airline, a business that is fiercely competitive and consumer centric, unlike his other businesses. Maran's lack of involvement cost him.

Ajay Singh felt he could make a difference, since his involvement in the airline he founded gave him a better grasp of the space. He appeared passionate about SpiceJet as a brand and worked hard to argue, as Sanjiv Kapoor did, that SpiceJet's situation was far from Kingfisher's in 2012.

He believed the airline had plenty to rebuild on, including a strong team led by performers Sanjiv Kapoor and Kaneswaran Avili. But the outside environment was changing fast and competition was getting stiffer. SpiceJet would have to play to its strengths to be in a healthier state by May 2015, a month of very high domestic demand, and the month the airline had started operations in its present form 10 years earlier.