27. January 2007


Date: 27. Jan. 2007
The Tata group is likely to double its stake in SpiceJet to around 14% and involve itself in the management of the Delhi-based airline. The Tatas are expected to invest more in SpiceJet when the airline goes for another round of fund-raising in the near future.
Both SpiceJet and the Tata group have denied such a move. When contacted, a Tata spokesperson said: ”Tata Investment Corporation and Ewart Investments had picked up stake in SpiceJet. No investment has been made in SpiceJet by them after that.” “The company has not received any information that the Tatas are interested to pick up stake beyond the preferential allotment,” SpiceJet CEO Siddanth Sharma said.
According to sources, the SpiceJet management is rather keen to utilise the Tata group’s management expertise in running the airline’s day-to-day operations. The airline’s management has invited the Tatas to take a seat on its board, they said.
Till date, both the companies have held that the Tata Group is involved with the low-cost carrier as a financial investor. In the last round of fund raising of around Rs 300 crore, SpiceJet diluted 25% stake to a clutch of investors, including the Tata group, Istithmar (the Dubai government’s private equity arm), BNP Paribas and Goldman Sachs. The Tata Group, through two of its investment arms, picked up around 7% stake for Rs 75 crore while Istithmar raised its equity from 3% to 11% by pumping in $25 million. BNP Paribas invested $15 million for 4% equity while Goldman Sachs picked up 1.5% for around $5 million.
The US-based private equity fund Texas Pacific Group (TPG), which had initially expressed its interest to invest $30 million in the low-cost carrier, has pulled out. It remains to be seen if TPG would also enter the fray when SpiceJet goes out to raise another $50 million in its next round of equity dilution. SpiceJet management had held that TPG would re-visit the issue of investing in the company at a latter date.
The additional funds will be used by SpiceJet to part finance purchase of 10 Boeing 373-900 aircraft to be delivered in 2009. SpiceJet plans to add another eight aircraft by 2007-end, with 10 more joining the fleet in 2008. The airline operates a fleet of 10 Boeings.
Source: http://economictimes.indiatimes.com


Date: 27. Jan. 2007
Low-cost airline SpiceJet on Friday offered 99,999 seats at a price of 99 paise each, applicable on travelling between February 15 to April 15.
These promotional seats will be available on all SpiceJet routes spanning across 14 destinations with 84 daily flights. Taxes will be extra.
The airline recently crossed three million passenger mark since its inception on May 23, 2005. SpiceJet achieved the milestone with its 10 new generation Boeing 737-800 aircraft, making it the only domestic airline with an average of three lakh passengers per aircraft.
The airline operates over 118 daily flights in 14 cities — Delhi, Mumbai, Kolkata, Chennai, Hyderabad, Jammu, Srinagar, Jaipur, Ahmedabad, Pune, Bangalore, Goa, Varanasi and Guwahati.
Source: http://mangalorean.com


Date: 27. Jan. 2007
A move by Kingfisher Airlines offering commission to travel agents on not just basic fare but fuel surcharge as well has ruffled many feathers. The Federation of Indian Airlines (FIA) has been debating the issue for some time now. Kingfisher Airline is the only airline in India, which gives 5% commission to travel agents on not just basic fare but fuel surcharge (Rs 750) as well.
As opposed to this, full service carriers such as Jet, Indian and Sahara give 5% commission only on the basic fare. According to the sources, Kingfisher Airlines has been asked by FIA to review and withdraw the commission on the fuel surcharge as it is seen as promoting unfair competition. The argument is: On account of the added incentive, travel agents promote Kingfisher Airlines among customers.
However, the Travel Agents Federation of India (TAFI) is putting pressure on all domestic carriers to give commission to agents on fuel surcharge. “There is no reason for dividing the air fare into two components. It is just a tactic of reducing the commission payable to travel agents,” says TAFI president Praveen Chugh.
However, the airline industry feels that there should be some uniformity in the practice of giving commission to travel agents. And that Kingfisher Airline needs to follow the same practice to maintain the uniformity. The bookings through travel agents contribute 65% to the total bookings of the Kingfisher Airline. The remaining business comes from the online model.
Source: http://economictimes.indiatimes.com