By Anupama Airy
In a rare gesture, US President Donald Trump on Monday thanked Indian carrier SpiceJet and its Chairman and Managing Director Ajay Singh for the mega aircraft order with Boeing that would help create tens of thousands of jobs in the US. The airline had placed an order for up to 205 737 Max with Boeing in January and topped it up with an order for 40 737 Max 10 last week in Paris. Excerpts of an interview with Ajay Singh:
Q) US President has thanked SpiceJet for the Boeing aircraft order.
A) Spicejet has placed an order for up to 205 planes with Boeing. This is a $22 billion order and these planes will be manufactured in the US. As per the US Department of Commerce, it creates 132000 high-skilled, high-paid American jobs within the US.
2) What is it that makes SpiceJet so attractive to investors?
A) SpiceJet has been one of the most efficient airlines operating in the fastest growing aviation market in the world. On almost all operational parameters the airline has outdone its rivals.
For the last 25 months in a row, we have had a load factor in excess of 92% and that is something of a global record. This is combined with the fact that we have had the best on-time performance in FY 17, we have now had nine profitable quarters and we have had amongst the least cancellations in the industry. So in terms of operations, SpiceJet is doing extremely well. Our hard work is being noticed by all — whether it is passengers or investors.
There are other things as well that make us so attractive. SpiceJet operates India’s largest regional fleet and is the only organized operator in this space. We have paid back most of the liabilities. Today, there are no government dues, there is zero bank debt. We have cleaned the slate as far as the past is concerned.
We have continuously improved upon our yields and our fares and this is what we will do going forward. We have placed a large order for the Boeing 737 MAX, in fact, the biggest ever placed by an Indian airline with Boeing. The new planes start to join the fleet in the middle of 2018 and with that our operating cost will further go down. It seems to us that things this year, so far, appear to be better than they were last year. We do hope and expect that the bottom line is going to be better than what it was last year.
3) Where are you going to get the money for the $26 billion in plane orders? What are the options?
A) Funding arrangements for those are coming very quickly in place. We have already funded significant number of those aircraft through a sale and leaseback mechanism. And we have several offers. We really see no great challenge to funding these planes. Going further, we will take a call, depending on what is cheaper for us at that point in time. Our objective is that whatever we go in for should reduce the cost of financing. Fortunately, we are in a pretty conducive financial environment, where interest rates are low across the world. And this is an immediately ‘finance-able’ aircraft. So, it will help us reduce financing cost too.
4) Do you think there is excess capacity in the market?
A) At SpiceJet, our objective is very clear. We want to be the most profitable airline in the country. We want to be the best airline in terms of on time performance and we want to have the least cancellations. This is critical for us. We want to continuously delight our customers and make them happier and make their journey easier and smoother. There is enough for more; even if the market grows around 12-15%, there is a requirement of 60 aircraft every year. There is space for all.