SpiceJet Slashes Fares By 75 Percent

Offer is valid for travel between April 1 and June 30, the airline said on its website.

Feb. 24--MUMBAI -- India's second largest low-fare airline SpiceJet Ltd on Monday cut fares by 75% for bookings made during 24-26 February to fill seats during the lean season.

This offer is valid for travel between 1 April and 30 June, the airline said on its website.

According to the SpiceJet website, a typical Mumbai-Delhi fare would be as low Rs.3,186 after the discount compared with the last-minute booking price of Rs.10,098, while Delhi-Goa fare would be Rs.3,737 against Rs.11,148.

"Super Summer Sale is valid on all domestic direct flights on the SpiceJet network. SpiceJet will offer discount on base fare and fuel surcharge only. All applicable fees and taxes to be paid by the customer," the airline website said.

Travel agents said other airlines including IndiGo and GoAir will now be forced to slash fares.

Sharat Dhall, president at Yatra Online Pvt. Ltd, that runs Yatra.com, said SpiceJet has launched a three-day sale of up to 75% for flights between 1 April and 30 June and the discount ranges from 35% to 75% on current fares across sectors and is an attempt to stimulate the market and garner early bookings for the summer holiday season.

"IndiGo has also launched special summer fares for the same period, and I expect other carriers to follow suit as well. This is a bonanza for holiday makers and a great opportunity to get super discounted fates for the family holiday this summer," Dhall said.

"We are already seeing bookings triple from normal levels within hours of the sale being announced," Dhall added.

The promotional fare plan comes at a time when SpiceJet is looking for investment to fund its expansion plan. Last week, consultancy firm Centre for Asia-Pacific Aviation, or Capa, said in a report that SpiceJet is estimated to need close to $200 million to remain operationally viable, while a realistic and meaningful turnaround may require $300 million or more.

Chennai-headquartered SpiceJet recently appointed consulting firm Bain and Co. to restructure its network and return it to profitability after losses mounted over the past few quarters.

As of 31 March 2013, the total accumulated losses of the airline industry over the previous seven years had risen to $8.6 billion (based on current exchange rates), consultancy firm Capa said in its last week report adding the industry debt had climbed to $12.6 billion, with the full-service carriers -- Air India Ltd, Jet Airways (India) Ltd and Kingfisher Airlines Ltd -- accounting for 94% of the amount.

SpiceJet, controlled by media baron Kalanithi Maran, posted a net loss of Rs.173 crore in the three months to December, against a net profit of Rs.103 crore in the year-ago quarter.

In January, SpiceJet had cut fares by more than half for bookings for three days, a move promptly followed by other airlines including Jet Airways and Air India.

"SpiceJet is committed to leading the way in offering the most attractive fares to the most customers. We received overwhelming positive feedback from customers who booked the earlier 'Super Sales' for taking the lead in making air travel more affordable, where travelers can now book more spontaneously and more often by air, and also for attracting many first time air travelers who would otherwise endure long train journeys or not travel at all," said Sanjiv Kapoor, chief operating officer, SpiceJet.

Kapoor said these advance purchase offers are a win-win for customers, for airlines, and for the travel industry and the economy overall, as it leads to significant demand stimulation, even as customers get to enjoy deeply discounted fares, airlines get to reduce wastage of seats that would otherwise fly empty, and others in the travel ecosystem get more business.

"These are not fare wars as is commonly reported, as there are no losers. This is just basic customer segmentation and inventory and revenue management," he added.

Copyright 2014 - Mint, New Delhi

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