BackSpiceJet does not need two fathers: Sanjiv Kapoor
In an interview, Sanjiv Kapoor, who resigned last week as COO of SpiceJet, says his job is done as the airline is stable and the co-founder is back
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Mumbai: Sanjiv Kapoor resigned last week as chief operating officer (COO) of SpiceJet Ltd, India’s second-largest low-fare airline, after piloting it through two turbulent years. Kapoor was hired by SpiceJet’s former promoter and media baron Kalanithi Maran in 2013. Kapoor was at the helm during SpiceJet’s darkest hour on 16 December 2014, when the airline had to ground flights for 10 hours and employees on the frontlines were abused and even assaulted by agitated passengers. This was due to financial troubles.
In an interview, Kapoor says his job is done as the airline is stable and profitable and the co-founder is back.
In January, Ajay Singh, a co-founder of SpiceJet, who sold his stake in the airline in 2010, re-entered SpiceJet by buying a controlling stake from Maran. On Friday, Vistara, a full service airline run by Tata Sia Airlines Ltd, said Kapoor would be joining the airline as its chief strategy and commercial officer in February 2016.
Kapoor justified his move to Vistara. “Any airline, regardless of business model, needs to maximize revenues and minimize costs. Scale is important regardless of business model. All else being equal, the winners within any business model, FSC (full service), LCC (low-cost carrier), or hybrid, are the airlines that have the lowest cost and highest revenues within that model," Kapoor says.
Edited excerpts of the interview:
What led to this? Was it a voluntary decision or forceful one?
I want to make this categorically clear as it is really not done to have false rumours start spreading every time a senior executive leaves a company. It was completely my choice to leave. I felt my job is done, the airline is stable and profitable again and back in the hands of its co-founder (Ajay Singh). The father of the airline is back. We do not need two fathers. I have done my part, time to move on gracefully and let Ajay take his baby to the next level. I wish him and SpiceJet well, and will always be proud of what we achieved despite daunting challenges and huge legacy losses and liabilities.
What’s is the feeling now?
A feeling of pride intertwined with sadness. Pride at what we achieved despite huge headwinds, especially in 2014, and how we drove innovation and changed Indian aviation in the process with our spunk and innovations. The world-leading market growth rate of 20-30% is not by accident, it can be directly tracked to the demand stimulation that SpiceJet brought to the market, with a refusal to fly half-empty aircraft around in low season, and a refusal to be happy with just 80% occupancy in high season. Others were forced to follow and the rest is history—the market grew at record rates, all airlines improved revenue performance as a result, while airports and the larger travel ecosystem got a growth windfall with more Indians flying than ever before thanks to affordable fares. Sadness because SpiceJet became like one warm, passionate, happy family, bound together in good times and bad. And now I am leaving that family.
In two years, you are going to work with a third promoter.
I have enjoyed working with both the Marans (Kalanithi Maran of Sun TV Group) and Ajay Singh and have learnt a lot from both, and look forward to working with Tata-Sia, the bluest chip names one can have in Indian aviation. Their baby Vistara has fantastic genes, and has made a strong impact already in less than a year. The sky is literally the limit for Vistara. I look forward to working with Phee Teik Yeoh (chief executive officer of Vistara) and the entire team starting next year.
How hands on was Singh?
Very hands on where he needed to be, especially relating to areas that should be handled by the board and promoter. Ajay also shares a passion for the brand and product, and tracks key metrics daily very closely. ‘With All My Heart’ was the branding, we developed last year under me to rally the troops and communicate a promise to our customers; the new branding ‘Red. Hot. Spicy’ is driven by Ajay, he has a good pulse of the youth and wanted a more youthful and bold branding. It takes SpiceJet back closer to how it was when it first started.
What was the challenging moment in SpiceJet? How did you overcome?
The most challenging time was August-September 2014, when the funding deal fell through for reasons completely unrelated to SpiceJet. At the same time, we had to clear over ₹ 400 crore of deferred taxes dating from 2012, and that too in low season, with oil prices still near record highs in India. This resulted in the crisis that came to head in December 2014. But all that is history now, the environment in 2015 has been far more positive, funding has come with ownership change, the co-founder is back as promoter, and SpiceJet is back on its feet strongly.
What did SpiceJet teach you?
To never give up, to believe, to challenge the status quo if it is working against you, to take charge of one’s own fate, to communicate clearly and constantly with all stakeholders internally and externally, to rally and support the troops so that they stay committed, good times or bad. Most importantly, it taught me that if you take good care of your troops, they will take good care of your customers and support you in times of crisis. That is what kept us going during our toughest period in mid-December 2014.
What did SpiceJet teach others?
Very simply, it taught others that following a rigid pricing model and flying empty seats around is pointless, that there is no lack of demand in India if you can change the approach to pricing and revenue management. It also taught others that flying does not have to be robotic and boring, it can be fun, colourful, and exciting. It brought the joy back into flying for both the crew and the customers.
What are the things or achievements that you keep close to your heart?
The very survival in extremely tough circumstances and the ensuing turnaround is something I will always be proud of. As well as of the impact we had on Indian aviation across multiple dimensions, how we challenged the status quo, how we threw away the old competitive playbook and came up with something completely different that worked much better for us. We have changed Indian aviation forever. The impact we have had is phenomenal.
What are the regrets?
The biggest regret is that the funding deal fell through in August 2014, forcing us to reduce our fleet and downscale just before oil prices started to plummet, which was a real tragedy. We lost half our Boeing fleet. We are rebuilding now as quickly as possible, but the funding deal collapse and downsizing at exactly the wrong time will be my biggest regret.
You led flash sales. You still believe in the same?
Of course. These sales and promotions have transformed the Indian market and helped SpiceJet not only survive in the absence of funding, but also significantly improved its revenue performance and reduce its losses last year while fuel prices were still near record levels. That is the reason these sales still continue, not only at SpiceJet, but across all airlines. They work, they are a win-win for airlines and customers. And they are truly a windfall for OTAs (online travel agents), airports, hotels, travel operators, tax authorities, and others for whom the increased passenger volume directly translates to increased revenues as the fare discounts do not reduce what they collect per passenger.
You are an out and out LCC man. How does that fit in FSC culture of Vistara?
I have actually over the years worked with both LCCs and FSCs, both as a manager and as a consultant. SpiceMAX, which is SpiceJet’s version of premium economy (a concept that is outside of the pure LCC model), was an innovation I am particularly proud of. It has found a loyal following. And at the end of the day, the basic principles behind airlines are the same: Any airline, regardless of business model, needs to maximize revenues and minimize costs. Scale is important, regardless of business model. All else being equal, the winners within any business model, FSC, LCC, or hybrid, are the airlines that have the lowest cost and highest revenues within that model.
What is your take on draft civil aviation policy as a non SpiceJet man?
There are many positive ideas that have been forward in the draft policy across several dimensions. If it can be implemented, it will be a big step forward for aviation in India. Having said that, a forward-looking decision in the best and undisputed national interest needs to be made on 5/20 as soon as possible for the benefit of all stakeholders, the uncertainty is not good for anyone. Pricing should be left to market forces, no floors or ceilings or fixed rates. Attention should be given to proper maintenance of existing airports, especially Tier 2 and Tier 3 airports, in addition to building new ones where required. Airport charges need to be benchmarked to regional levels and not simply set on a cost-plus basis, as then there is no incentive for airports to reduce costs.
(Under the existing 5/20 rule, Indian airlines have to wait for five years and have a fleet of 20 aircraft before they can fly abroad. Vistara was lobbying to abolish the rule, while SpiceJet was batting to retain the regulation.)
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