Spicejet eyes freight, digital forays to offset risks related to fuel
WASHINGTON:SPICEJET is planning to diversify its activities beyond “pure aviation” to protect itself from the high risks associated with this sector and will announce soon forays into a dedicated freight business in cargo and courier logistics, which could be the first for an Indian airline, and developing digital aviation and travel products. They are both likely to be in collaboration with international partners. “We believe that we must hedge ourselves from the risk of being in a pure aviation business and find businesses which are connected to aviation but which could be a little more insulated from the high cost of fuel,” said Spicejet co-founder and CEO Ajay Singh, adding, “so we are looking at some new areas.”
Rising oil prices are a big concern for the aviation industry as the rest of the world—fuel accounts for an estimated 40% an airline’s costs—and with the US reimposing sanctions on Iran’s crude exports from November, a fresh round of hikes are expected, unless other oil producers are able to step in with extra supplies, specially for large buyers like India.
Singh, who had co-founded Spicejet in 2005 and sold it in 2010 and required ownership of the company in 2015 after it had gone bankrupt, said the company had done “exceedingly well” in the last three years. But there was a need to diversify, beyond activities entered around aviation.
The affable Spicejet CEO, whose multi-billion dollar order of airplanes from Boeing got a shoutout from President Donald Trump during his June 2017 news briefing with Prime Minister Narendra Modi at the White House, was here in Washington to receive a leadership award from the Us-india Strategic Partnership Forum (USISPF). The first of these orders are due for delivery in August.
Singh spoke fleetingly of these plans in his acceptance speech and shared some details later; but he was extremely reluctant to give away too much ahead of the announcements.
The first new area was in the space of “cargo and courier logistics business”, he said. From the few details he gave, this could be a joint venture with an American firm—“we believe that there is a lot of experience doing that here in the US”.