SpiceJet overhauls top management

Delhi-based low-cost carrier SpiceJet is looking at restructuring its core leadership team as part of US investor Wilbur Ross’s strategy of turning around the company.

Four or five months after Ross came on board following a Rs 345-crore investment in the company, five top executives from the airline’s leadership team have quit. These are Chief Executive Officer (CEO) Siddhanta Sharma, Chief Financial Officer (CFO) Parthasarathy Basu and Executive Vice-President (flight operations), JS Dhillon and Head of Engineering Neil Charters. Company sources said Director Kishore Gupta, who is heading customer relations, is also on the move.

The new CEO, Sanjay Aggarwal, who was former chief of US air service provider Flight Options, took charge at the end of October and Charters was replaced by Robert Bryant as head of operations. The earlier head of airports I P Singh has been replaced by V Ankesh, and former chief pilot Jack Ekl is heading flight operations .

The company is now looking for a chief financial officer and the customer relations department now reports directly to the new CEO.

The cash from Ross has been partly used to pay off the carrier’s airport, oil and hotel dues.

“I cannot say there has been a clear mandate for a change in the team but at the end of the day we have to ensure that the right people are doing the right jobs,” Aggarwal said.

Aggarwal also confirmed that the company may pare the top management structure if it is required under a plan to consolidate the company’s HR structure. “If there are some decisions to be taken, we will go ahead and take them,” he said.

Meanwhile, the carrier plans to expand the number of daily flights from 98 to around 120 by the middle of this month. This expansion will include restarting operations to Kochi, introducing new city-pairs like Kolkata-Goa and connecting other tourist destinations like Jaipur, Hyderabad, Kolkata and Ahmedabad. SpiceJet has withdrawn its plans of returning three of its aircraft to the lessors, which means that it has an expanded fleet now.

Company executives, however, said that since flights are going to increase by more than 20 per cent, average aircraft utilisation will remain at 12 hours as before. Passenger loads this month have however have fallen by 10 per cent as compared to December last year.

“We are definitely looking at under-serviced destinations, and our decision comes as a result of a decline in fuel prices as well as the fact that competition has cut capacity,” said Aggarwal, adding that as a result of the decline in fuel prices, aviation turbine fuel now accounts for 40 per cent of total costs in November against 55 per cent in August.

Aggarwal said the company had achieved operational breakeven in November and might start making money in December.

Company executives added that the airline was in talks with Kochi to reduce airport charges 10 to 15 per cent. Kochi airport, which is operated by Cochin International Airport Ltd, has the highest airport charges in India, one reason many airlines have opted out of that airport.

Another cost-cutting measure the airline is considering is relocating the C-checks (complete overhauling) of its aircraft to India from overseas. The move is expected to halve engineering expenses, currently the third-largest cost component after fuel and lease rentals.

SpiceJet is in talks with Airworks, which recently set up a Maintenance Repair and Overhaul (MRO) facility in Hossur near Bangalore.