Cheap Air Tickets Bringing in More Flyers: SpiceJet

Domestic budget airline SpiceJet has been at the forefront of announcing promotional schemes to attract flyers. Speaking to NDTV Profit, Sanjiv Kapoor, chief operating officer of SpiceJet, the airline has seen a bump-up in passenger traffic, whenever it has launched such schemes.

Explaining the rationale for launching such schemes, Mr Kapoor said, "We don't like to fly empty planes. Once a plane takes off that empty seat is lost forever." (Watch)

By selling excess capacity in advance, through advance fare schemes, "We are trying to get rid of excess capacity early so that close to the date to the departure we are leaving with much fuller capacity" the SpiceJet executive added.

Other airlines have also periodically launched advance fare schemes. This has seen passenger traffic rising in recent months. In September, domestic airlines saw a 28 per cent growth in passenger traffic as compared to a year earlier.

Besides promotional schemes, an uptick in consumer sentiment has also contributed to the higher airline traffic. Giving a breakup, Mr Kapoor estimates 8-9 per cent traffic growth coming from the rise in business sentiment and 18-20 per cent from demand-inducing promotional schemes. Mr Kapoor sees a pick-up in passenger traffic in October though it has not officially declared the passenger traffic details.

"It's a win-win situation for everybody. By stimulating demand through advance purchase schemes, total revenue per aircraft goes up," he added.

During the first quarter (April-June), SpiceJet reported nearly 10 per cent rise in revenue per available seat-kilometre.

Sharing another insight into passenger behavior, Mr Kapoor said that if the discount fares are delayed at the last minute, customers prove to be least price sensitive. "If you do you biggest discount in the last minute, you are shooting yourself in the foot," he said.

Recently, the price of jet fuel was slashed by 7.3 per cent in a big relief to airlines. According to estimates, fuel charges contribute to nearly one-third of an airline's operational expenses.

"The jet fuel price has been cut by 10 per cent in last two months. And based on last fiscal's numbers, it could save us Rs 320 crore  in fuel expenses," Mr Kapoor added.

But airlines have not yet announced a cut in passenger fares. "In India, airfares are among the lowest in the world on an average but despite the price cut fuel prices are significantly higher than the global average," he said. Fares can't go lower than what they are today, Mr Kapoor added.