Can white knight Ajay Singh save the airlineIJ
With SpiceJet's original promoter Ajay Singh returning to the helm of affairs at the beleaguered airline and taking over management control, there is hope that the low-cost air service will not fold up. Mr Singh has acquired a 53 per cent stake in the cash-strapped airline from the Maran family, and subject to the deal's approval by the Government, SpiceJet may just get a fresh lease of life. But it is not going to be easy for him to turn the fortunes around of the airline. Money crunch is just one of the problems — though it is the main one. Mr Singh will have to address managerial decisions of the past as well. For instance, the airline had spread itself too thin, plying on routes that proved unviable.
Meanwhile, it had also gone in for major expansions, taking on aircraft that bled its bottom line, both in terms of operational efficiency and financial returns. The previous owners had also gone in for large, and what proved to be in the medium run expensive, hiring of personnel. Eventually, many lost their jobs. Mr Singh has hinted at a downsizing of staff, and this can only mean that retrenchments are on the way. On the other hand, he has also send out the message that in matters of fresh hiring, those who had to quit will be given preference.
It is too early to say whether major hiring will happen, because the priority is to get the airline back on its legs and reduce the massive cancellation of flights over the past months. The ‘Scheme of Reconstruction and Revival', which the airline's board has approved, lays down a roadmap that it hopes will go down well with the potential financiers and the Government. What remains critical to the success of the plan is the sustainability of customer confidence. Over the last few months of the airline facing turbulence, fliers have been naturally abandoning SpiceJet, either because they were uncertain of its continuance or because of cancellation of flights. There is intense competition in the Indian skies today, and brand loyalty is fickle. SpiceJet will find it difficult to win over customers if it does not shape up soon.
The good part is that Mr Singh is very serious on the airline's revival, unlike the Maran family which had begun to treat SpiceJet as a burden that was best shed at the earliest. The promoters' loss of interest was evident from the fact that Mr Kalanithi Maran, the principal promoter, could have easily tided over the immediate funds paucity to the tune of some Rs1,500 crore, by offloading a very small percentage of his share in Sun TV which he controls along with other family members. That he did not do so demonstrated his disinterest in the venture. Mr Singh's foray will comes as a relief to the Government, which was troubled by the prospect of the airline going down and jeopardizing the employment of 5,000 persons. This explains the Centre’s interest in the case.