Escolar Documentos
Profissional Documentos
Cultura Documentos
TheIndustrialistSK
Modi,inapartnershipwiththeGermanflagcarrierLufthansa,endorsedthecompany
inyear1996.Inyear2002,thecompanyhadchangeditsnamefromModiLuftLtdto
RoyalAirwaysandstarteddomesticairflights.Inyear1996,theairlinehaltedits
operationsbutaftereightyears,in2004,thecompanyraisednewfundsand
resurrecteditsoperationsasSpiceJet.Inthesameyear,thecompanyalsosigneda
contractwithBoeingtopurchaseBoeing737800aircrafts.Inyear2010,the
companygotDirectorateGeneralofCivilAviation(DGCA)nodetooperateonafew
selectedinternationalrouteslikeDubaiandSingapore.
Sincecommencement,theSpiceJetshasbeenfollowingitsstrategytooffersecure,
unfailingtravelatlowcostfromonepointtoother.Ithasbeenefficientlyutilizingall
itsresources,keepingallprocessessimple.SpiceJethasbeenavoidingspendingon
factorsthatarenotrelatedtotheelementarypurposeoftravel.Theairlinehasbeen
offeringthedynamicfarestoitscustomers,keepingthesafetyandcomfortofits
passengersatastandardlevel.
SpiceJethasbeenoneoftheintensivelowcostcarriersintheairlineindustry.Ithas
beenpositionedtomakeprofitseveninafluctuatingindustryscenario.Ithasbeen
revisingitsfleetsizeinordertomanagecostsinefficientmanner.Ithasbeenusing
Boeing737800andBoeing737900ERfordomesticroutesandinternational
destinationsrespectively.Inyear2011,itaddedBombardierQ400aircraftstoitsfleet
grouptoincreaseconnectivitytoTierIIandTierIIIcities.Inyear2014,itadded
MuscatasforitsinternationalrouteandDharmashalaforitsdomesticroute.
AccordingtoMarketLinereport,currentlySpiceJethasafleetsizeof58aircraftsthat
operatesacross51destinations.Ithasbeenshowingaphasedsizeexpansionof
capacityfromFY05toFY15[Exhibit1].
AsperSpiceJetsannualreport,itsoperatingrevenuehasgrownat12.56percent
[Exhibit2]fromthefinancialyear(FY)1314toFY1415,whichispredominantly
drivenby6.2percent[Exhibit4]surgeinoverallpassengertraffic.Theincreasein
passengertrafficincludesdomesticpassengertrafficandinternationalpassenger
trafficthathasbeengrowingby3percentand98percentrespectively.
Theavailableseatkilometer(million)andflightsoperatedhasbeenincreasingfrom
FY2011toFY14.AccordingtoSpiceJetsannualreport,Thesetwocomponents
havebeengrowingatanaveragerateof22.15percentand32.16percent[Exhibit3]
respectivelybecauseoftheintroductionoflatestBoeing737aircraft.
Accordingtocompany,ICICIdirect.comResearch,SpiceJetspassengertraffichas
grownwithaCAGRof23.3[Exhibit4]percentduringFY0914ascomparedto
overallindustrypassengertrafficCAGRof9.17[Exhibit4]percentduringthesame
period.
AccordingtoCrisilresearchreport,thedomesticmarketshareofSpiceJethasbeen
varyingbetween17to19percent[Exhibit2]fromtheFY201011toQ1FY2014
2015.Themarketshareofitsinternationaloperationshasincreasedfrom1.9percent
inFY201213to4.5percentinFY201314[Exhibit2]becauseoftheadditionof
fewinternationaldestinationslikeHongKongandDhaka.However,themarketshare
hasdecreasedto2.7percentinQuarter1FY20142015[Exhibit2]
Theoperatingexpensesforthecompanyhavebeenincreasingovertheyears.Asper
companysannualreport,thetotaloperatingexpenseshasincreasedby25percent
fromFY13toFY14[Exhibit5].OperatingexpensescomponentslikeAircraft
delivery,maintenance,andleaserentalaircrafthaveseenmaximumsurgeinthecost.
Also,thenetprofitofSpiceJethasdeclinedtoanegative424.9percentinFY14from
FY13accordingtocompanysannualreport.However,theoperatingmarginhad
impactedbytheweekpassengerloadfactor(PLFs),around8percentsurgein
aviationturbinefuel(ATF)prices,andweakeningofcurrencyby12percentinFY
20132014fromFY20122013.Allthesefactorshavebeenaccountableforhigher
expensesoffuelandotherstructuralcosts.
SpiceJethasbeenimplementingbestinternalandexternalexercisesforimproving
productivityinworkperformance.Also,thecompanyhasastrongrelationship
betweenemployeesandinternalcontrolinprocessesbutthecompanyis
unsatisfactoryintermsofnetprofitandinthecourseofstrengtheningitsspotinthe
market.
Exhibits
Exhibit1
Numberoffleet
Year
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
05
06
07
08
09
10
11
12
13
14
11
17
23
26
30
34
42
58
Fleet
Coun
t
Exhibit2
OperatingRevenueandMarketshare
Year
Operating
FY11
FY12
FY13
FY14
Average
10467
39433
56007
63042
276.73
42.03
12.56
110.44
Market
(paxkm)
share
20
1.9
19
4.5
19
2.7
18.75
3.03
Revenue(INR
million)
%Increase
Domestic
International
17
Exhibit3
AvailableseatkilometerandFlightoperatedperyear
Year
Availableseat
kilometer
(million)
FY11
10467
FY12
13717
FY13
16338
FY14
19003
Average
Percentage
change
Flightoperated 53963
Percentage
31.04
19.10
16.31
22.15
81139
50.36
109267
34.66
121788
11.45
32.16
change
Exhibit4
Passengertraffic
Year
Overall
FY9
FY10
FY11
FY12
FY13 FY14P
CAGR
industry
396
452.8
543.1
616
604.5
614.4
9.17%
SpiceJet
41.1
57
72.8
92.7
112
116.9
23.30%
Exhibit5
OperatingExpenses
Operating
FY2014(Rs
FY2013(Rs
Percentage
Expense
Aircraftfueland
Million)
Million)
change
32,526.60
28,033.15
16%
10,531.74
8,081.02
30%
9,932.53
6,737.56
47%
4,740.10
3,540.11
34%
741.84
571.03
30%
291.48
80.04
264%
453.91
215.67
110%
oil
Leaserental
aircraft,
Aircraft
maintenancecost
Landing,
navigation&
airportcharges
Operating
softwarecharges
Aircraftdelivery
andredelivery
costs
Otheroperating
expenses
Exhibit6
Comparisonofnetprofits
Year
NetProfit
Percentage
FY11
1012
FY12
6058
FY13
1911
FY14
10032
change
698.60
68.45
424.96