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SpiceJet's revival has lessons for Air India

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prasad1

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Barely six months ago, SpiceJet was in a state of crisis with an uncertain future.

Fleet and network had shrunk, market share was down, lessors were demanding back aircraft for non-payment of lease rentals, and service providers like Airports Authority of India and oil companies had suspended credit lines seeking payment of outstanding dues.

Kingfisher Airlines' collapse was fresh in the minds of all. No questions on SpiceJet's ability to survive are, however, being raised today as the airline has almost scripted a successful turnaround story.


Air India has also been in a state of crisis - for years now. Questions, however, continue to be raised on its ability to survive without the periodic infusion of funds by the government.

What is it that makes the crisis story of the two airlines so different? First, it is a question of assuming ownership. While in the case of SpiceJet, Ajay Singh, who returned as a promoter and infused funds, assumed ownership, one is not so sure in the case of Air India.

One is, in fact, befuddled as to who is indeed running the airline? Is it one of the two ministers, the cabinet and the minister of state, the bureaucrats in the civil aviation ministry or the management headed by a bureaucrat - all with no experience of aviation sector or running a commercial entity?


Second is the question of taking drastic measures, however unpalatable, to put the airline on track. SpiceJet has clearly followed one of the successful global turnaround stories - it reduced debt, consolidated finances and then systematically began expanding fleet and network.

It is hoping to regain market share that it commanded before it was engulfed in a state on crisis in the not-so-distant future. Air India, on the other hand, has been following a turnaround plan formulated by a committee, which lacked experience and accountability, but generously backed it with a Rs 30,000 crore (Rs 300 billion) financial package.

http://www.rediff.com/business/repo...evival-has-lessons-for-air-india/20150709.htm

Why is the Indian Tax Payers subsidizing the middle class, and bunch of incompetent bureaucrats.
 
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