Last year, the employees of SpiceJet had an inkling that it was not going to be a good Christmas. Flights were being cancelled routinely, leaving passengers stranded at airports across the country, and bookings were drying up. The airline was struggling to pay salaries and bills. Then the worst news came on December 16, 2014—the airline decided to stop operations owing to lack of funds, and some 4,000 employees were told not come back to work.
While many people started writing the obituary of SpiceJet, Ajay Singh, a former promoter of the airline, spotted an opportunity. Still a minority shareholder in the company, he approached Kalanithi Maran, the owner of the troubled Sun media empire who held a majority stake in SpiceJet, and bought out his stake. Singh believed SpiceJet was poised for a turnaround, as consumer demand was on the rise and fuel prices were going down. However, it was more than a business decision. “I would be telling you untruth if [I did not say] it wasn't part emotion,” says Singh, 49. “It was a brand we had built with great passion, great energy. And to see that brand fall into disrepute, to see these large numbers of cancellations, to see people that I had recruited take that hit, to see them take that abuse and to see them stand up to that abuse and to try and do it as gracefully as they could.... I just wanted to give them another chance.”
Singh started working immediately on reducing the cancellations. The next task was flying on time and keeping ticket prices reasonable. Then he ensured those who flew SpiceJet had a “courteous interaction” with it.
Singh had done it all earlier. He first took charge of the airline in 2005, in its earlier avatar as ModiLuft, which was in a bad situation. By the time he lowered his shareholding in 2010, SpiceJet was well on its feet. In fact, he never wanted to exit the airline, but the new owners “wanted to run it their way”.
When he returned, Singh found that the airline’s organisational culture had changed. It was a house divided and riddled with petty politicking, and employees were running low on morale. “I think when you've got beaten up for a few years and you've consistently been losing money, it takes a toll,” he says. And, the business model was watered down to a washy concoction. “People had forgotten what it meant to be a low-cost airline and the culture of a low-cost airline, where you are looking at every element of cost, both in the structural aspect as well as in day-to-day life,” he says.
Singh cites the example of the team's response to his questions on the cost per available seat kilometre (CASK), a metric denoting the maintenance and operating cost of each seat incurred by the company, to show how the airline departed from its core business model. “It seemed they had forgotten what these terms were and that was really strange because we all used to live by that,” he says. The employees were talking in terms of generalities and it was as if the company had lost its hold over the nitty-gritty. It was evident from some contracts the airline had signed that the confidence of the senior management had hit rock bottom. “I asked them why we had signed these contracts. ‘Even if the owners didn't know much about aviation, you guys did. How could you let them sign this stuff?' And it seemed to me that people don't take responsibility as much. Perhaps they had tried in the early days to tell the new owners what the problem was, but, over time, people had obviously given up,” he says.
As Singh set about restoring financial sanity to SpiceJet, things started looking up quickly. In the January-March quarter, which is typically a weak one for airlines, SpiceJet posted a profit, its share price jumped 10 per cent in a single day. The two subsequent quarters have also been profitable.
Singh finds turning around ailing companies more interesting than setting up ventures. “I think there is a lot of value to be created in them. Not only financial value, but also social value,” he says. In 1995, he became a director at the sinking Delhi Transport Corporation (DTC). At that time it was operating just 300 buses on the road. “There were 40,000 employees sitting around getting salaries,” he says. “And let me tell you, these guys didn't really enjoy getting that salary sitting at home. Nobody wants that. People want to work, people want to be productive, people want to contribute.” DTC was profitable when he left it.
But then why did many senior managers quit SpiceJet after Singh returned? “These were people who just didn't fit in.” he says. “They were extremely high-cost resources as well. At the end of the day, we have to do what is best for the brand and the organisation, and I think that's something that's shared across the company.”
Kiran Koteshwar, who has been heading strategy and projects at SpiceJet since 2007, says the work culture and environment at the company have turned more open and inclusive since Singh's return. “Quick decisions followed by immediate implementation, creative freedom at all levels with empowerment, recognition, work satisfaction, transparency and an open-door culture have been significant achievements,” he says. “Many employees who left us have come back and there are others who are in the process of joining back.”
The improved situation has earned the confidence of investors as well. “There is a sense of direction at the company now,” says Vikas Khemani, president and chief executive officer at Edelweiss Securities Ltd. With SpiceJet joining the pack of profitable private airlines, aviation turbine fuel prices remaining low and the formulation of a new draft civil aviation policy, the sector may be on the road to recovery.
Singh believes that there is massive potential for growth as currently only about 25 million Indians (just 2 per cent of the population) are travelling by air. He says the concept of “stimulating with price” can work wonders, as it did in the telecommunication sector during his stint at the telecom ministry earlier in his career.
SpiceJet, he says, has a long way to go. He does not like things being just 'okay'. “The fact that... for six months in a row now we have had 92 per cent occupancy shows that people are back,” he says, thanking the staff, passengers, market regulators (who relaxed a takeover norm) and the government. “The government didn't want to see another Kingfisher-like situation. And, interestingly, the media was extremely positive. I think Mr [Vijay] Mallya [promoter of the defunct Kingfisher Airlines] didn't get the same courtesy.”
Courteous and soft-spoken to a fault, Singh is an art collector and a movie buff. He played cricket in school and college and represented Delhi in table tennis. But, such interests have taken the back seat now, as he works late at SpiceJet's Gurgaon office every day. And, he is not paid for the work. “I said I was not going to draw a salary till the company is profitable,” he says. “That's what I'd started with. Then I said, 'OK, I'll not draw a salary till we are profitable for one full financial year.' So we'll see.” Seems he will not have to wait long for the paycheque.