Is SpiceJet Shutting ? Future of Spicejet

Spicejet Future : Spicejet, which is India’s leading on time performer in airline is taking last breath ? Spicejet is currently going on the path of Jet Airways. Spicejet deducted more than 50% salaries of pilots and upto 70-80% salaries of other staff like Air hostess or ground personnel.

Airlines in India need short-term support from the government as revenues have dried up due to the outbreak of COVID-19, Ajay Singh, chairman and managing director of SpiceJet said.

Speaking at a webinar organised by Bird Group, Singh said aviation is the most impacted industry in the world and in India, and revenues from the aviation industry have come to “zero” across the world.

Govt of India has currently not taken any steps for saving the airlines or any other particular industry. Currently, Govt may not be in a position to save any dying Airline or industry. This is a major crisis all over the world.

“Governments throughout the world are trying to ensure that airlines don’t collapse. Airlines in India need short term support from government, we are talking to them on a daily basis,” Singh said.

Spicejet was recently preparing all the aircrafts, buses etc for flying post lockdown as per the guidelines of DGCA.SpiceJet, taped crosses are seen marking seats on which passengers will not be allowed to sit.

The aviation industry witnessed another jolt today when the government announced that the ban on domestic and international travel has been extended till May 3 in line with the extension of lockdown. This development comes at the time when airlines were ready to operate some of their flights from April 15.

IS SPICEJET GOING ON JET AIRWAYS PATH ?

The unprecedented crisis has led to airlines, including SpiceJet, resort to salary cuts and minimise costs to ride through the situation.

Ajay Singh was to take a salary cut of 30 percent for the month of March but the company had assured that all of its employees in the lowest pay grades will remain unaffected.

Following is the chart which shows Spicejet condition was detriating and could be seen on stock prices as well. 1 year back Spicejet was trading at Rs 148 , currently it has come down to Rs 48.60 only.

However, in the last week, Spicejet shares were recovering and it increased 20% .

Today, Singh said the government needs to follow a model followed in other countries and support airlines in payment of some salaries as well.

“Government can look at helping out airlines in payment of some salaries, exemption on airport charges for a period of time, credit with interest subvention, reduction of excise duty on Aviation Turbine Fuel (ATF) for a short period of time,” Singh said, adding that the country should use this crisis as an opportunity to make long pending structural reforms.INTERVIEW

“Bringing ATF under Goods and Services Tax (GST) is a long pending request and this will make airlines cost competitive. Changes are needed in whole structure of airports, process of concession agreement. We also need to look at anomalies…we are providing Rs 60-70 per passenger to SITA…these should be looked at, infrastructure charges at airports need to be suspended,” Singh added.

Other than IndiGo, SpiceJet was an aggressive international player in India over the last one year. Post the Suspension of Jet Airways, IndiGo and SpiceJet tried to capitalise on the available capacity and added international services frequently.

The crisis due to COVID-19 is second difficult situation for the airline in a year after its entire MAX fleet of 13 planes got grounded in March 2019. The airline had depended on MAX for fuelling its International and domestic growth in a cost-effective manner with a total order-book comprising 155 firm orders and 50 options.Spicejet Future is very uncertain and one may currently avoid booking tickets with spicejet airlines .

“We need to see how we can use this crisis to increase aviation footprint of Indian airlines. If India wants global hubs, global airlines in the country then we need structural changes in our system,” Singh said.SpiceJet is the second largest domestic airline with 15.3 percent market share as per February DGCA data. It is also the third largest international player among domestic airlines. Currently, it is operating cargo flights via its cargo segment called SpiceXpress for transporting essential goods.

Ajay Singh was the savior of Spice jet .