SpiceJet is set to place a “big” fleet order as softening of global oil prices have lowered air fares and boosted demand in world’s second most populous country. Speaking to Bloomberg TV India, SpiceJet Chairman Ajay Singh says the airliner was talking to both Airbus and Boeing for the order. The private airline was working round the clock to trim sticky costs to the best of its ability and improve occupancy, which has gone up from 72 per cent to 92 per cent over the last seven months, he said.
The global economy is in gloom and global oil prices are at over a decade low. However, the latest tourism data shows a silver-lining over the Indian sky. What’s the scenario on the aviation space?
You need to obviously work on the revenue pieces to try and ensure that your revenues are going to improve over a period of time. And remember, in this year, the oil prices came down. When oil prices come down, fares come down and fares have come down. So, we needed to ensure that the revenue remains consistent and grew more as more people fly. One thing that we did consciously was to try and see that our load or occupancy factors went up — from the levels of 72 per cent, they averaged 92 per cent over the last seven months. That has ensured that our top line has remained consistent. Now, there were some costs that were sticky costs like aircraft acquisition cost and engineering cost. And those costs take longer typically to address. But there are some that have been addressed pretty quickly. In terms of consolidating the network, in terms of ensuring that you are not flying to very many destinations but flying to fewer destinations with greater frequency. You can look at some of the contracts, which can be quickly addressed. You can look at the sales costs and various other elements.
What is happening with SpiceJet in terms of fleet strength? Is it going to be an all-Airbus fleet or is it going to be an all- Boeing fleet? How are you viewing that?
It will be a single aircraft fleet. It will be either Boeing or Airbus. We are talking to both the manufacturers. It is important that we do the right transaction because this is the transaction that will live with SpiceJet for the next 10-15 years. Therefore, it is important that we do it right.
Have you made up your mind yet whether it is going to be an Airbus or Boeing?
Not yet. We are talking to the manufacturers and are looking to do the best commercial deal that we possibly can.
Is there a big order that SpiceJet is going to place very soon?
Of course, we will place a large order and would like to place it soon. But we need to place the right order on the right terms and we are talking to them to ensure that can happen.