Low-cost Carriers in India: SpiceJet's Perspective
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.
This case is appropriate for postgraduate courses in management, specifically business environment and strategic management courses. The objective of the case is to point out the significance of the macro- and micro-level business environment factors that impact the effective conduct of a business. Further, this case helps students appreciate the importance and interpretation of managerial tools, such as the internal factor evaluation (IFE) matrix, the external factor evaluation (EFE) matrix, and the competitive profile matrix (CPM). It also assists students in preparing similar tools, such as the comparative analysis matrix (CAM) and core competency evaluation matrix (CCEM), which aid in devising strategies for the successful functioning of a business.
Airline Industry; Capital Requirements; Capital Investments; Low-cost Operating Levels; India
Transportation and Warehousing
India, Large, 2011
$3.95 CAD / $3.95 USD Printed Copy
$3.40 CAD / $3.40 USD Permissions
$3.40 CAD / $3.40 USD Digital Download