Case Name :      Low-cost Carriers in India: SpiceJet’s Perspective

Authors :           Sanjeev Prashar, Adeshwar Raja Balaji Pras, V.S. Parasaran, Vijay Kumar Venna, Sashikanth Yenika

Source :             Ivey Publishing

Case ID :            W12048

Discipline :        General Management

Case Length :    14 pages

Solution Sample availability : YES

Plagiarism : NO (100% Original work)

This case discusses the emergence of low-cost carriers (LCCs) in India in relation to the growth of the Indian aviation industry and the subsequent fall of the LCCs into financial loss. The LCCs became important for value-adding and cost-cutting alternatives in corporate business travel. Before the 2008 global economic crisis, domestic air traffic LCCs recorded a compound annual passenger growth rate of 18 per cent. Among the many low-cost airlines in India, SpiceJet had been one of the most popular, with the lowest airfares and highest customer value. Though SpiceJet had a net profit of INR 1.01 billion (US$20.2 million) in fiscal year 2010-2011, the results following the financial year indicated that the company had also joined the ranks of loss-making airlines in India. A host of issues – such as rising debt, increasing cost to revenue ratios, growing management challenges, complicated flight operations, and rising oil prices – were threatening the survival of airline companies, especially LCCs. SpiceJet was no exception.