SpiceJet’s Consistently good Performance over Five Quarters on a Trot is Helping redefine The Business Viability of low-cost Carriers in an Industry which sets Great Store by Premium Services.
Quite often, abrupt changes in a company can rock the business boat. Or they could nudge the company into taking a new direction or chart a different path. At SpiceJet, India’s second-largest low-cost airline, which got a new owner and then a new CEO in recent months, the recent changes have set the airline on course for exciting times ahead. Ever since south Indian media tycoon and Sun TV chief Kalanithi Maran (grand nephew of Tamil Nadu Chief Minister M. Karunanidhi), one of the richest men in India with a net worth of more than $3.5 billion, bought a 37.7% stake in SpiceJet through his company KAL Airways for Rs.7.39 billion in June 2010, the airline has been making both positive moves and news. In November last year, Maran raised his stake to 38.66% for an additional Rs.1.46 billion taking his total investment to about Rs.9 billion in SpiceJet. Clearly, Maran was betting on heady growth for budget air travel in India. The airline has also seen top-deck management change with new CEO Neil Mills taking charge of the cockpit in October 2010 last year.
Analysts believe that the airline industry will clock a growth rate of 15-17% annually over the next few years and low-cost carriers will capture three-fourths of the market. Passenger traffic grew 19% YoY in 2010 to 52 million and is expected to grow 19% over the next five years. With air travel once again booming, the biggest growth segment for the aviation industry is going to be the budget airlines. Analysts like Dhiraj Mathur, Executive Director, PwC India, tell B&E how the Asia Pacific region (including – India, China and West Asia) is set to be the driver of high growth in the aviation industry. Subsequently, the number of commercial aircraft in India would touch anywhere between 575 and 600 in 2015 and 975 and 990 in 2020; and one reason for this growth is the apparent success of the low-cost carrier model.
Quite often, abrupt changes in a company can rock the business boat. Or they could nudge the company into taking a new direction or chart a different path. At SpiceJet, India’s second-largest low-cost airline, which got a new owner and then a new CEO in recent months, the recent changes have set the airline on course for exciting times ahead. Ever since south Indian media tycoon and Sun TV chief Kalanithi Maran (grand nephew of Tamil Nadu Chief Minister M. Karunanidhi), one of the richest men in India with a net worth of more than $3.5 billion, bought a 37.7% stake in SpiceJet through his company KAL Airways for Rs.7.39 billion in June 2010, the airline has been making both positive moves and news. In November last year, Maran raised his stake to 38.66% for an additional Rs.1.46 billion taking his total investment to about Rs.9 billion in SpiceJet. Clearly, Maran was betting on heady growth for budget air travel in India. The airline has also seen top-deck management change with new CEO Neil Mills taking charge of the cockpit in October 2010 last year.
Analysts believe that the airline industry will clock a growth rate of 15-17% annually over the next few years and low-cost carriers will capture three-fourths of the market. Passenger traffic grew 19% YoY in 2010 to 52 million and is expected to grow 19% over the next five years. With air travel once again booming, the biggest growth segment for the aviation industry is going to be the budget airlines. Analysts like Dhiraj Mathur, Executive Director, PwC India, tell B&E how the Asia Pacific region (including – India, China and West Asia) is set to be the driver of high growth in the aviation industry. Subsequently, the number of commercial aircraft in India would touch anywhere between 575 and 600 in 2015 and 975 and 990 in 2020; and one reason for this growth is the apparent success of the low-cost carrier model.
Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).
For More IIPM Info, Visit below mentioned IIPM articles
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).
For More IIPM Info, Visit below mentioned IIPM articles
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Ranked 1st in International Exposure (ahead of all the IIMs)
Ranked 6th Overall
Zee Business Best B-School Survey 2012
Prof. Arindam Chaudhuri’s Session at IMA Indore
IIPM IN FINANCIAL TIMES, UK. FEATURE OF THE WEEK
IIPM strong hold on Placement : 10000 Students Placed in last 5 year
IIPM’s Management Consulting Arm-Planman Consulting
Professor Arindam Chaudhuri – A Man For The Society….
IIPM: Indian Institute of Planning and Management
IIPM makes business education truly global
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age Woman
IIPM B-School Facebook Page
IIPM Global Exposure
IIPM Best B School India
IIPM B-School Detail
IIPM Links
IIPM : The B-School with a Human Face
IIPM – FLP (Flexi Learning Program)
