The plight of SpiceJet is something that I cannot shake from my mind. This is an airline that is carrying out a survival plan of action – staging massive ticket sales to rake-in cash for working capital for most of 2014. SpiceJet has had success with this strategy before – it knows it needs to get passengers on seats and make up the lost margin on ancillary revenue sales. Recent figures showed that this process was having some success and as such the airline could yet grow itself out of its current dire cashflow situation. But leased aircraft are at this time being stripped of parts to service the active fleet. Some lessors such as BBAM have been extracting aircraft as they go-into the MRO for service, but all lessors with aircraft remaining in the airline must now wonder what they should do: Do they attempt to pull all aircraft and sink SpiceJet; or do they try and ride it out with the airline as some did with Kingfisher? I have here credible first-hand accounts of aircraft being sent for service and extracted by lessors that have been heavily stripped for parts. I hope SpiceJet can ride out 2014 into the arms of an investor but the signs are very far from good.
Some say how is it that IndiGo can make money, the answer lies in the investment in huge aircraft orders at prices around the $28m per unit cost (more or less free engines of course), which means the airline is able to sell aircraft at a good profit as and when the need arises, supplementing their income. The airline has done very well out of this strategy and with new aircraft orders signals a continuation of the same strategy going forward. Indigo cannot lose with 36 month term on a320neo aircraft on its new order batch.