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Explained: The Amsterdam to Bengaluru flight that was SpiceJet's. Or was it?

SpiceJet had claimed the flight to be the first wide-body service by a low cost airline from India

August 03, 2020 / 07:31 PM IST
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It's a big moment for any airline, to have its first wide-body operation. Like SpiceJet did on August 1, when it operated a charter flight bringing back home 269 Indians from Amsterdam.

The airline aggressively marketed the event on social media, right from July 28, claiming it to be the first Indian low-cost carrier to operate a wide-body aircraft. It got bytes from scores of passengers who took the flight, and even Venu Rajamony, India’s Ambassador to the Netherlands.

"SpiceJet is showing both innovation and aggression in going after new opportunities, and there is money to be made in these repatriation flights, especially if they can carry passengers both ways," Sanjiv Kapoor, the former COO of SpiceJet, said on Twitter.

But then, the airline was also lampooned for its claims, leading to debates on Twitter between industry veterans.

Kapoor, who was also the chief strategy and commercial officer at Vistara, says that as much as it was innovative, the marketing was also 'misleading.'  Many industry executives claimed that SpiceJet may not be right in claiming the flight as its own.  "If the flight was indeed SpiceJet's, why didn't the airline sell the tickets on its own website," asks a senior industry executive.

What's the issue?

According to reports, SpiceJet had wet-leased an Airbus A330 aircraft from Hi Fly, a Portuguese charter airline, to operate the flight.

Industry regulator DGCA defines a wet lease as thus:

A lease arrangement whereby a lessor provides an aircraft with entire crew to the lessee for a specified period or a defined number of flights.

It's not just the aircraft and the crew. In most cases, a wet lease also comes with maintenance and insurance provided by the lessor. The lessee, or the airline, mostly spends just on fuel and gives pilots and the crew a daily allowance and accommodation.

In a dry lease, on the other hand, the airline just gets the aircraft, and brings in everything else.

Understood. Go on.

What got the industry talk going was that the flight carried not SpiceJet's, but Hi Fly's code, a unique alphanumeric arrangement that each airline has.

Hi Fly has two codes, each given by IATA - the industry organisation that represents airlines - and ICAO, a United Nations agency that influences aviation rules and regulations. Hi Fly's codes are 5K and HFY. SpiceJet's is SG.

Why wasn't the flight carrying SpiceJet's code?

Moneycontrol asked SpiceJet the same. The airline replied with a detailed explanation:

“SpiceJet has applied for an A330 wet lease approval with the concerned authorities. While approvals from various departments, including security clearances, take time and follow the due process, there was a pressing need to repatriate a large number of Indians stranded in Amsterdam. Hence, a marketing arrangement was worked out to operate this flight.

"SpiceJet negotiated with the lessor and arranged for the aircraft, coordinated with the local authorities in Amsterdam and Schiphol airport and the Indian community in Amsterdam and Indians residing in neighbouring European countries who wanted to come back home, got all the required flight permissions from Indian and Amsterdam authorities, arranged for grounding handling, on-board catering etc.

"In short, there was an urgent requirement to bring our fellow citizen back home and SpiceJet stepped in to help, took the lead, coordinated with all stakeholders and ensured a seamless operation. We are pleased that with this charter flight we played a key role in getting our fellow Indians back home.”

The explanation tallies with what DGCA officials told Moneycontrol:

"SpiceJet was given just in-principle approval to import the aircraft on wet lease. It is not permitted to operate the flight on SpiceJet’s code till the time it is imported and technical evaluations is done by DAW (DGCA's Airworthiness Directorate) and FSD (Flight Standards Directorate) before endorsement done on SpiceJet's AOC. Therefore, repatriation flight from Amsterdam couldn't have used SpiceJet code."

So that wasn't a flight operated on a wet-leased aircraft?

That is right. SpiceJet is still in the process of getting the approvals for a wet lease. And industry officials concur that getting a wet lease approved can be a long drawn process.

The Amsterdam-Bengaluru flight was more like a flight for which, apart from doing everything that it explained above, SpiceJet got the rights to market as its own.

It's a practice that is common in the aviation world. "Delta Air Line, the American carrier, does it everyday," says a senior industry executive.

The executive points out that the Amsterdam flight did carry a SG code on its domestic leg. From Bengaluru, the aircraft flew to Hyderabad.

One more thing.

What?When SpiceJet does get the approvals for its wet lease, it will be interesting to see how the airline uses the aircraft. And that is because a wet lease is about 40 percent more expensive than a dry lease, says an industry consultant. An expensive proposition, when one looks at the airline's financial condition.
Prince Mathews Thomas heads the corporate bureau of Moneycontrol. He has been covering the business world for 16 years, having worked in The Hindu Business Line, Forbes India, Dow Jones Newswires, The Economic Times, Business Standard and The Week. A Chevening scholar, Prince has also authored The Consolidators, a book on second generation entrepreneurs.
first published: Aug 3, 2020 06:26 pm

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