What The Future Holds For SpiceJet

Thursday, 8th May 2014 at 07:22am

Will SpiceJet have the same fate as Kingfisher? What does the future hold for the beleaguered airline that can't seem to find the right formula to stem its growing losses year after year? The answers to these nagging questions lie in SpiceJet itself.

According to the latest reports, the airline posted a loss of more than $170 million in the last fiscal year. Such loss is reportedly more than its total assets, which suggests that the airline is now on the brink of bankruptcy.

India's airlines don't seem to understand fully well the country's travel market resulting to poor demand and patronage. Kingfisher Airlines was the first victim of the aviation crisis that started to hit the country in 2010 and lasted for over two years. In 2012, Kingfisher was forced to fold up after it was unable to operate several number of flights due to the grounding of its planes and labor strikes.

The problems that Kingfisher encountered during its hardest times seem to be absent in the case of SpiceJet. What SpiceJet blames the most for much of its current woes is the weak rupee, which started to dive in value against the dollar late last year.

Most operational costs for about 75% of India's airlines hinge on the US dollar. The devaluation of rupee against the dollar consequently affects their operating costs. In fact, SpiceJet's loss incurred during the last fiscal year ending March 2014 was primarily attributed to last year's sharp devaluation of the rupee against the US currency.

The crippling effect of the dollar to Indian airlines makes the country's aviation industry a volatile industry.

With its mounting losses, huge debts, and inability to find a right formula to fix its problems, SpiceJet's future seems to be hazy indeed. Will a foreign investor in shining armor come to its rescue? Nobody knows at the moment.

Currently, the airline has 38 jets and 15 turboprops in its fleet, with B737-800 variant composes the majority of the jets and 6 of them are B737-900ER. It flies to over 47 domestic and 7 regional destinations.

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