Even as the ailing SpiceJet tries to turn the corner, Singapore-based low-cost carrier Tigerair has terminated its three-year inter-line agreement with the domestic airline in less than a year. The tie-up ended earlier this month, mainly because the revenue target could not be met, Tigerair’s director for sales and marketing, Teh Yikchuan, told Business Standard.
Tigerair, which had signed the agreement with SpiceJet in December 2013, sent a termination letter to the latter in December last year, with a 30-day notice period. Singapore Airlines, a 49 per cent stakeholder in India’s newest airline, Vistara, is also the largest shareholder in Tigerair with a 56 per cent stake.
“The SpiceJet inter-line has expired. The numbers are not exactly what we expected. There were not as many connecting passengers as we had originally hoped for, so we decided not to continue with it after about a year. There is a cost to maintaining the agreement; it did not make any sense for us,” Yikchuan said.
SpiceJet did not respond to emailed queries but its chief operating officer, Sanjiv Kapoor, posted on microblobbing site, Twitter: “Not another blow, with network changes this no longer made commercial sense, that’s all.”
Under the December 2013 agreement, customers travelling on SpiceJet’s domestic network from 14 Indian cities were to initially enjoy seamless connection through Hyderabad’s Rajiv Gandhi International Airport on to Tigerair’s Singapore-bound flights. From the Singapore hub, they could then fly elsewhere. In the second stage, Tigerair customers from Singapore were to enjoy access to SpiceJet’s domestic network.
“This partnership will hugely benefit travellers from India and Singapore, and represents one of the building blocks of the emerging new SpiceJet,” Kapoor had said at the time of announcement of the tie-up.
Sources close to the development, however, said several challenges had cropped up in implementation of the plan. Matching flight schedules for both airlines proved a major challenge — in some cases, flyers had to wait for as much as seven hours at domestic airports between flights. Also, SpiceJet was unable to sell standalone Tigerair tickets on its system. The result: The inter-line did not even meet 30 per cent of the revenue target.
The development comes at a time when SpiceJet is working to revive its operations with fresh investments of Rs 1,500 crore from a consortium of investors led by founder-promoter Ajay Singh. SpiceJet has liabilities of about Rs 1,400 crore to airports and other vendors, and an accumulated loss of a little more than Rs 3,000 crore.