In a time when Jet Airways is down, AirIndia is in loss, SpiceJet continues to rule the segment. It was the only airline that generated a profit of ₹261.7 crores in the first four months of 2019 in India. In this blog-post, we discussed in details how they managed to achieve this magical number? What are they doing differently from the other airlines? Read the article to find out all the answers. Towards the end, we also discussed the insights of the SpiceJet logo and its meaning.
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a) First of all, let us discuss the origin of the company to understand the journey better.
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SpiceJet Limited is an India based airline company that was founded in 2004 after Ajay Singh purchased the Modiluft company. Currently, it is headquartered in Gurugram, Haryana and Mr Ajay Singh is the Managing Director of the company.
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Origin of the Company: The company was established as an air taxi service provider by an Indian Industrialist, Mr S. K. Modi in 1984. Later in 1993, after the partnership with German flag carrier Lufthansa, the company was named as MG Express and was later again renamed as Modiluft.
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Origin of SpiceJet: In 2004, Mr Ajay Singh, current Managing Director of the company, bought Modiluft and restarted the company as Royal Airways. The name was used for a very short duration and was changed to SpiceJet in 2005. Mr Ajay Singh re-acquired the ownership of the company back in 2015.
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The First national Flight: The company opened its flight booking on 19 May 2005, and the first flight was operated on 24 May 2005, between New Delhi and Mumbai.
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The First international flight: The first international flight was operated between New Delhi and Katmandu, Nepal on 7 October 2010.
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Some of the achievements of the company:
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- SpiceJet is the only Indian airline to win “National Award for Cost Management”.
- SpiceJet won the “Frost & Sullivan Indian Commercial Aviation Emerging Company of the Year Award” in November 2008.
- The company also won the “London Smart Travel Asia’s Top 10 Best Budget Airlines in Asia Award” in September 2008.
- The Outlook Traveller declared it as “The Best Low-cost Airline” on February 2008.
- The ministry of civil aviation, the government of India and FICCI presented SpiceJet an award for “Best Domestic Airline” on March 2018.
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b) The factors which lead the company to become the most profitable airlines.
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Why the rise of SpiceJet is considered as a fairytale?
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This is because the company was on the verge of closing down the airlines back in 2014. There were three critical issues that the company faced:
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1) The Director-General of Civil Aviation(DGCA) barred the company from booking any tickets beyond 31st December 2014 which affected the revenue system of the company very badly. SpiceJet generated maximum revenue by selling tickets well in advance and at a discounted rate. DGCA was concerned with this practice because, in case of cancellation of flight, a potential fallout of customer could occur.
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2) In the case of Kingfisher airlines, the Airport Authority of India had suffered huge losses due to non-payment of dues. They were unwilling to give flight permission to SpiceJet until they cleared all their dues.
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3) As the price of crude oil kept on increasing year after year, the revenue of SpiceJet kept on decreasing. Even though the company suffered losses, they kept on introducing discounted offers and flight tickets. In the financial year 2013, they launched 25 flash sales of tickets. The company was also overstaffed which added to continue loss in revenue. SpiceJet reported a loss of ₹1003.2 crores in the financial year 2013-14.
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The actual rise of the company started after January 2015, when Mr Ajay Singh took over the company from the Sun Group. He identified the root cause of all problems i.e., the loss of trust of customers. He implemented several measures and took some bold steps to build the company back, like:
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- Fired top position executives who drew a high salary.
- Met executives of oil companies to give them oil in credit.
- Set up own training centres to cut down training cost.
- Shutdown 5 domestic and 3 international destinations.
- Renegotiated the maintenance contact of the company.
- Introduced the ₹ 1 sale.
- Introduced new integrity-based measures during the holiday period to win back the lost trust of customers.
- Modified the offer plans to not include key dates.
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The above measures and strict actions of Mr Ajay helped the company to win back the lost trust of its customers. Within a short duration, SpiceJet cleared all its dept, pending payments of oil companies and generated net positive revenue in the fourth quarter of the financial year 2015.
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The company didn’t plan to stop after clearing its dept. It expanded itself and purchased 100 new 737 MAX 8 aircraft in January 2017. The company currently operates 312 daily flights to 55 destinations and generates an income of around ₹2.75 crores per day.
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c) Ever wondered what does the SpiceJet logo means?
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The name SpiceJet was introduced in 2005, prior to that the ownership, name of the company were different. It was known as Modiluft until 2004.
Mr Ajay Singh purchased the company in 2004 and launched the name SpiceJet in 2005. The very same year the SpiceJet logo was unveiled. He later sold the company to the Maran family in 2010 and re-acquired it back in 2015 to save the company from financial crises.
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The airline’s logo consists of 15 dots arranged in three rows of five each in the order of their reducing sizes. In June 2015, the airline unveiled its current logo with a new tagline “Red. Hot. Spicy” to capture the youth. SpiceJet names all its aircraft with the name of the Indian spice.
Related Blogs: Jet Airways Logo
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