Tuesday, November 18, 2014

SpiceJet's Q2 Signals Cheap Air Tickets are Here to Stay

Budget carrier SpiceJet started the trend of announcing hefty discounts on air fares in India. Despite being neck-deep in losses, India's third largest carrier by market share cut air fares on some tickets by 50 per cent in January 2014 and followed up with a series of even steeper discounts. (Read)

By the end of the year, the price of a promotional SpiceJet ticket came down to triple digits. Other airlines followed suit raising fears of a price war in India's troubled aviation sector, where only a couple of carriers are making profits.

There was apprehension that SpiceJet was resorting to "mindless discounting", but second quarter results show that "there is a method to the madness", SpiceJet's COO Sanjiv Kapoor told NDTV on Monday. SpiceJet lost Rs 310 crore in the three months to September 30, which is 45 per cent less than the Rs 560 crore it lost last year. (Watch the full interview here)

The narrowing of losses has been driven by operational performance, SpiceJet says. The carrier has increased the passenger load factor, which measures the capacity utilization in percentage and cut down costs.
18/11/14 Varun Sinha/NDTV
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