SpiceJet: Fare cuts not done on 'indiscriminate basis'

'Super Sale', 'Super Sale Summer Offer', 'Second Chance Super Sale' and now 'Super Holi Sale'. SpiceJet has triggered a fare war in Indian skies by coming up with its fourth discount offer in just over two months.

SL Narayanan, the chief financial officer of SpiceJet's parent Sun Group, told NDTV that "there is total method to this madness. We don't do these fare cuts on an indiscriminate basis. It is highly capacity controlled. It is targeted at weak routes and certain time of the day when people generally don't travel."

He says that fare cuts are commonly done by even by high premium carriers to exhaust unsold inventory.

Mr Narayanan says the fare cuts are aimed at discretionary flyers like retirees who would like to take advantage of low fares. "It is case of making sure that that your asset productivity gets maximised because these (aircraft) are very expensive equipment. It does not make sense run them load at 75 per cent load," he said.

(Watch: Low fares to attract discretionary flyers, says SpiceJet)

Under SpiceJet's 'Super Holi Sale' offer, which runs through March 16, fares start as low as Rs Rs 1,999 (all inclusive) on select routes for travel between April 14 and June 30.

Explaining the rationale of such low fares, Mr Narayanan says, "Every additional passenger aircraft who can be put on the aircraft is contribution accretive. The additional fuel cost goes up by couple a few hundred rupees even if you get a couple of thousand rupees."

Kapil Kaul, South Asia CEO of Centre for Asia Pacific Aviation says the if airfares are cut on a targeted basis, it could be revenue positive for airlines. Besides, selling advance purchase tickets help airlines get much-needed funds, Mr Kaul adds.

Mr Narayanan of SpiceJet says its capacity utilisation has gone up as compared to the previous year despite an increase in capacity and increase in normal fares.