Graham Newton talks to Ajay Singh, CEO, SpiceJet, about the need for continuous innovation as aviation heads toward recovery.
What is the latest situation for the airline?
Last year was the worst ever time for aviation. And it was no different for us.
India completely locked down in March 2020 and all passenger traffic came to a halt. That lasted for two months. We then began with a few small services, flying just 30,000 passengers a month across the entire network. We were able to grow to 300,000 passengers and though was not quite pre-pandemic levels, we were optimistic.
Then India was hit by a second wave and traffic dropped immediately to less than 40,000 passengers a month. We’re getting nearer to 200,000 passengers now and things are improving but we have to hope that there isn’t a third wave.
What is your strategy to regain profitability?
There are three main areas that have helped enormously during the pandemic and that we will look to focus on.
The first is cargo. When passenger services came to a halt, we immediately decided to increase air cargo. Not only did we need to get medicines and personal protective equipment to and from different parts of the world but also our flights were important within India. Our road transport network was affected and is poor anyway.
We repurposed our passenger planes and also leased freighter aircraft. Basically, we focused on moving goods not people. It was important to have that mindset because it enabled us to see an opportunity to grow a multi-modal business. Air cargo is not just about flying. This side of the business has grown seven or eight-fold since the start of the pandemic.
Second, we have a thriving charter business that was initially set up to deal with repatriation flights. There were flights from countries we hadn’t served before including the United States, some of the countries around Russia, and some EU destinations too. It went well and has become a new line of business.
Third, we worked hard to reduce cost. That meant renegotiating leases, maintenance contracts, and much more. We are also resizing, looking at our fleet strategy, and developing a more efficient network.
We will have one or two years of pain, but it will be worth many more years of gain.
What more do you need from the Indian Government?
The pandemic has caused so much disruption in this country and many small businesses have gone bankrupt. Understandably, in India the government has had to focus its help on those at subsistence level.
So, help for aviation has been limited although there are loans guaranteed by the government to which airlines have access.
But we have requested that the government looks at ongoing fundamental issues like high taxes on aviation fuel. We want structural changes. Fuel, for example, should come under the general sales tax.
Airport charges also need to be examined. Basically, the highest bidder always wins the contract for service provision at partially privatised airports. Ground handling, for example, will be done by the vendor who offered the airport the most money. The bidder wants to recoup their outlay and that translates into higher charges for airlines.
We need to look at the bidding structure and the mindset. The government must understand the role aviation plays. It is a multiplier and has a positive effect on local and national economies. And we can’t go back to the days when only rich people could afford to fly.
It is these structural issues that need addressing more than the provision of short-term loans.
Is cargo now a more respected part of the industry?
Absolutely. All airlines are looking at cargo with different eyes because it will be a big center of revenue going forward.
And it is not just airlines realizing the value of cargo but everybody, including governments. The need for good logistics is essential to the modern world. The blockage of the Suez Canal emphasised this point.
Though there is a real shift to air cargo, the value is in multi-modal logistics. That is why we are building a platform to integrate various transport modes in a door-to-door service that will fulfil customer expectations.
What do you think Indian aviation will look like in five years’ time? A return to 2019 or something fundamentally different?
We will get back to 2019 ways in the sense that overall growth will be strong. There is huge latent demand in this country. Only a small percentage of people have flown so there is great potential. That was the case before, it will be the case again.
But there will be subtle changes in traveler trends and expectations. Although business travel will come back—nothing beats a face-to-face meeting—I think the mix of passengers will skew more toward leisure. Business travel will be hit slightly by Zoom and new ways of working.
And passengers will want to continue booking online, dropping off their own bags and so forth. Contactless travel is here to stay. In India, most of the population is under 30 years of age and tech-savvy. This is the way they want things to operate. There will be even more technological solutions in future.
As for health requirements, these will fade as people become more confident and we get on top of COVID, which I am sure will be the case.
Overall, the potential customer base in India is too large for long term negativity. My guess at this time is that by the end of 2022, aviation in India will be back to normal.
Tell us about the “Clean Skies” project and the need for even greater environmental mitigation efforts?
Clean Skies is extremely important. Again, it is about listening to the younger generation. They want more in terms of environmental effort and only want to associate with brands that do something about climate change.
SpiceJet has flown a Bombardier Q400 on sustainable aviation fuels (SAF) and will fly a Boeing on SAF soon. These are firsts in this part of the world. And we are launching a fully electric vehicle fleet policy, and even those vehicles that collect crew to take to the airport will be electric. So, we are working aggressively to use clean fuel throughout our operations.
At the moment, SAF are expensive but when we achieve scale they will become cheaper. It will happen because we have that younger generation continuously pushing every aspect of environmental work further and harder.
What new technologies particularly excite you?
All the contactless technologies work well. Hardly any of our passengers show up at the airport without a digital boarding pass. And we send them their baggage tag on their mobile phones. It is a win-win for passengers and airlines. It is just so much more efficient and all these pennies count.
In our planes, we don’t have magazine or menu cards any more. Everything is available on a smartphone through the SpiceJet App. Our entertainment system is just a small hard drive for streaming. There is much more available on the App too. We can suggest taxis and hotel rooms and help passengers organise their entire journey.
In the short term, we will look at the way loyalty programs work. An airline’s ability to generate user data means we will understand customers better and be able to offer an optimized service. Loyalty programs are ripe for development.
In the longer term, I am a big fan of electric aircraft. I think going fully electric is achievable for smaller passenger aircraft.
Looking at the industry in general, what trends or challenges or opportunities do you see as crucial?
There is no doubt that the largest challenge remains COVID. We don’t know if it will go away or when, if or how it will come back. But we do know that it won’t be confined to one country. A problem anywhere could have a big impact on everybody because this is a connected world.
But I am optimistic and think we will see passenger confidence come back. But we must continue to find better ways of doing what we do and also look for new sources of revenue. We can no longer think in traditional ways.
One aspect of this is the cooperation we have been seeing since the pandemic began. Airlines are finding ways to partner in all areas of the industry, such as lobbying governments and harmonising vaccine passports. The industry is much better aligned and that is a real positive.
Have you learned anything new about leadership from the crisis?
The main differences are flexibility and thinking out of the box. Leaders must learn to look at the world differently. Every day is a new day, and we need to keep innovating. The focus is on those people that think creatively. That is new for airlines.