SpiceJet CEO has fascinating interview with Skift

SpiceJet CEO has fascinating interview with Skift

Ajay Singh, the CEO of Indian low cost carrier SpiceJet, has given an interview to the team at Skift, and he had some pretty interesting comments to make.

But first, some quick background: Singh helped start SpiceJet in 2005 and sold it – while profitable – in 2010. The airline’s new buyers ran it into the ground, and Singh and his partners re-acquired it in December 2014. Since then, they’ve strengthened the domestic network, returned the airline to profit and are considering flying further afield.

Regarding the potential size of the Indian market, Singh said:

“There’s 33 million discrete passengers and off a population of 1.3 billion, this is under 3 percent of the population that flies. There is great potential. For international travel, there are only 40 million trips which probably means close to 20 million Indians go overseas. For a population of 1.3 billion, that is not even scratching the surface.”

He is absolutely right in that there is enormous potential for growth for all the airlines – in a sense, an absence of competition given the sheer number of people who need to get from Point A to B in India. But, many of these people can’t afford airplane tickets – I would have asked him how many of the 1.3B can pay for the most basic economy ticket on an Indian low cost carrier. That would give us a better idea of the real market. The other issue – which he does address – is infrastructure. Many of the major airports simply can’t handle more flights, and require expansion (i.e. Delhi).

Addressing the mentality of passengers towards domestic flights in India – what Skift said Singh had previously called “status conscious” travelers – he said:

“This is something that we found by interviewing people. People would say to us, ‘When there are two classes in a plane you want to be seen in the business class because that’s how you want the world to see you.’ But, if it’s a single-class plane, it’s easier to just say, ‘Fine, I’ve spent less, but I’m in the same class as everybody else, so it really doesn’t matter.’ We’ve seen a huge shift of consumers from full-service airlines to low-cost airlines. Today, 75 percent of the market is low-cost, and that’s increasing.”

Singh also noted that “status conscious” passengers won’t upgrade to extra legroom seats because the seat is exactly the same – there’s no “class divider.”

Skift asked the CEO about potentially acquiring Air India, but he said that at this juncture he and his investment group are not ready to make a bid for flag carrier, though he could just be down-playing expectations or using this as a negotiating tactic. He is right in that it is a big animal to grapple with, despite its brand strength, assets and flying rights. There are many stakeholders, including the government, and turning the airline around would surely be a messy, drawn-out affair.

Singh also discussed the number of passengers flying to India through external hubs, and said that there should be more direct flights in and out of the country – that it should have its own hubs. I completely agree with him, but as the Jet Airways and Air India models show, this is easier said than done. The strength of Air India’s newer direct routes to the US (San Francisco and Washington Dulles, for instance), speak to the potential there.

For more details on SpiceJet’s history and Ajay Singh, please read the full interview.

Interview: SpiceJet Founder Rescued an Airline and Has Big Ambitions for Indian Aviation

 

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