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Why SpiceJet Flights Barely Have Empty Seats

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Why SpiceJet Flights Barely Have Empty Seats
Budget carrier SpiceJet reported the highest passenger load factor of 93.2 per cent among domestic carriers in June, according to the latest data from aviation regulator Directorate General of Civil Aviation or DGCA. IndiGo came second with a load factor of 86.6 per cent in June.

Passenger load factor measures the capacity utilization of airlines or how many seats were filled as compared to the total capacity. This is the second consecutive month SpiceJet when has reported a load factor of more than 90 per cent. In May SpiceJet too topped the charts with a load factor of 93.1 per cent.

Commenting on the high load factor, SpiceJet chief operating officer Sanjiv Kapoor said it means "almost 9 out of 10 flights are 100 per cent full because to achieve 93 per cent (load factor) means there are few flights in the bay that are not going full".

"Those may be very early morning or late night flights. A vast majority have not one empty seats in them," Mr Kapoor said. (Watch)

Mr Kapoor attributed the high capacity utilization to its "smart" discounting or pricing policy. "It has been our philosophy not wanting to have empty airline seats because once the aircraft takes off the seat is gone forever. We in the last year and half have put together schemes to try to sell as many seats as possible that would have otherwise expect to gone empty especially in low season," he added.

Historically, passenger load factor during the low season has been around 65-67 per cent in Indian airlines, he said. "If 35 per cent of your seats are empty, you are losing revenue and it does not make sense to anyone."

Price war

Though SpiceJet has been regularly coming up with discount schemes, other domestic airlines too have taken on the Gurgaon-based carrier in an all-out fare war. Terming pricing management as a "combination art and science", Mr Kapoor said that SpiceJet has an advantage because it started the discount schemes "earlier than others and has more historical data to work with".

"We have more experience and we have been able to calibrate our pricing to sell more seats," he added.

Mr Kapoor attributed the turnaround of the airline to its pricing strategy. SpiceJet returned to profit in the March quarter after posting six quarters of losses.

The promotional schemes offered by different airlines have helped spur a strong passenger growth in the Indian skies. The number of passengers carried by domestic airlines during January-June this year rose to 388 lakh, as against 324 lakh during the corresponding period of previous year - an increase of nearly 20 per cent.

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