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SpiceJet's regional operations launch may be delayed

Kalanidhi Maran, who owns the budget airline SpiceJet, is DMK chief Karunanidhi's nephew. Following DMK's election loss, the airline's stock has suffered on performance parameters.

Sanjay Singh | May 24, 2011 | Updated 10:05 IST

Plans by leading low-cost carrier SpiceJet to launch regional operations by mid-July may be delayed following the political debacle of DMK in the Tamil Nadu elections and party MP Kanimozhi's arrest in the 2G scam case.

Kalanidhi Maran, who owns the Sun Television network and also bought budget airline SpiceJet, is a nephew of DMK chief Karunanidhi. Following DMK's election loss on May 13, the airline's stock has nosedived on largescale dumping by investors. On performance parameters too, SpiceJet has suffered - its load factor fell to 75.4 per cent during the January-March quarter of FY'11 from 81 per cent in the previous year's corresponding period.

"They (SpiceJet) have been slow and almost overshadowed by their rival IndiGo. They still have ownership issues involved. I am sure they may have problems in investments as the group has lost political clout now after DMK lost in Tamil Nadu," said an aviation expert who is also a chief executive officer (CEO) of a reputed firm that provides technology expertise to aviation as well as the travel industry.

In June 2010, Kalanidhi Maran had clinched a deal to acquire 37.7 per cent stake in the airline for about Rs 750 crore from American investor Wilbur Ross, his investment companies and the Kansagra family-promoted Royal Holding Services Ltd. However, ownership issues continue to dog the airline.

Maran holds a 38.66 per cent stake in the airline, together with his firm KAL Airways. He had taken over as the chairman last November, following completion of his acquisition of a majority stake in the company.

However, a top SpiceJet official said it had no political angles and such a notion is a farce. The airline has ordered 15 Bombardier Q400 turboprop aircraft, which are expected to start arriving from end-June onwards. "We are in the process of acquiring new Q400 next generation turboprop aircraft from Bombardier of Canada. All these aircraft will be with us by mid-July, when we would launch our regional operations," the chief commercial officer of the airline Samyukta Sridharan told Mail Today.

The Rajiv Gandhi International Airport at Hyderabad will be the first regional base for the Spice-Jet, Sridharan said, adding that most of its regional flights to central as well as southern states will largely originate from Hyderabad.

Apparently, GMR Group, which operates the Hyderabad airport, has agreed to partially rebate the user development fee of SpiceJet's regional operations at Hyderabad for a brief initial period. With 13.55 per cent market share, SpiceJet will be the first low-cost domestic aviation company to acquire smaller aircraft with 78 seats.

SpiceJet, which started operations in May 2005, currently flies to 21 destinations including its newly introduced direct flights from Nagpur to Bangalore and Delhi using new generation Boeing 737-800 aircraft.

Courtesy: Headlines Today

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