SpiceJet reignites fare war with new Holi offer
SpiceJet kicked off yet another round of price war by offering massive discounts on advance bookings. This is the fourth time this year that SpiceJet has slashed ticket prices in a bid to gain more passengers and improve its passenger load factor - a measure of how many of an airline's seats are being used.
While the earlier fare cuts were aimed to tide over the lean travel season between January and March, the latest offer is for travel between April and June. Shilpa Bhatia, senior vice president and head of sales and distribution at SpiceJet, said discounted fares are for those passengers willing to book early.
Fares for the 'Super Holi Sale' start at Rs 1,999 (all inclusive) on select routes for travel between April 14 and June 30 during the five-day sale starting Wednesday through March 16, SpiceJet said. IndiGo responded to SpiceJet's announcement, PTI reported, but there was no independent verification of the claim.
SpiceJet, controlled by billionaire Kalanithi Maran's Sun Group, has effected several organisational changes recently and successive decisions to slash airfares might be a part of some new strategy the company is working on, an analyst said.
In October 2013, SpiceJet appointed Sanjiv Kapoor, former chief executive officer (CEO) of Bangladesh's GMG Airlines, as its new chief operating officer (COO). Earlier this month, R Neelakantan was appointed as chief financial officer after Sam Issac quit the airline. Another senior executive, Virender Pal, resigned recently.
SL Narayanan, CFO of Sun Group, which is the promoter of SpiceJet told NDTV last month that fare cuts were aimed to induce demand among discretionary travellers and drive up utilisation.
"There are five players and everybody is slugging out for market share. We have done what we believe is good for our interest... If the process triggers some retaliatory action, we are prepared for that," said Mr Narayanan.
The fare cuts have come despite SpiceJet reporting losses in the previous two quarters mainly due to higher fuel costs, a sharp depreciation in the rupee and high taxes.
India's fourth-biggest airline by market share had reported a profit of Rs 50 crore in the June quarter, but followed it up with cumulative losses of Rs 731 crore in September and December quarters. Industry consultancy the Centre for Asia Pacific Aviation estimates that SpiceJet is on course to post its biggest-ever annual loss.
Meanwhile, shares in SpiceJet surged as much as 7.5 per cent on Wednesday after the carrier signed a deal with Boeing Co to buy 42 737 MAX jets in a deal worth $4.4 billion (nearly Rs. 26,800 crore at 1 dollar=61 rupees) at list prices.
The order could help SpiceJet seek new investors. SpiceJet is seen as a target for investors after the government relaxed restrictions on investment by foreign airlines. It has reported interest from potential investors but has not named any.
The long-awaited fleet renewal and the possible stake sale have become intertwined, industry sources have said, with the airline seen as potentially more attractive once it gets the new jets.
(With Agency inputs)