SpiceJet, the second largest carrier of the country, is also one of the providers of economical fares. Owned by the Sun Group, it has been serving Indian as well as international destinations since 2005 and 2010, respectively. Currently, more than 300 daily flights are operated by the carrier with a fleet size of over 35 aircraft. It includes highly-efficient models manufactured by Boeing and Airbus that carry millions of passengers every year. The cost of SpiceJet flight booking may drop down even further in the coming months. As per reports, this Sun Group-owned airline is already working on the new pricing strategy. Experts are of opinion that the market trend may change as a result of the demand and supply fluctuations.
The Indian no-frill carriers are operating at razor thin profits, and further decrease in air fare on their end may result in even lower revenues. However, to meet challenges posed by new airlines like AirAsia and soon to be launched Vistara, existing ones like GoAir, IndiGo and SpiceJet may introduce new pricing schemes. Not only LCCs, but full-fledged carriers like Air India and Jet Airways will also be affected as the Tata-Singapore Airlines venture – Vistara – is promising top-notch services. In addition to this, the leading airline of the country, IndiGo will also add new destinations and capacity in its booking option list as soon as new models start arriving. It ordered around 180 aircraft back in 2011, which is one of the biggest orders placed by an airline in the industry.
As per several reports, the demand for air travel is expected to rise that could have lead to rise in the flight ticket prices, but new flying options may push the pricing graph down. In addition to this, schemes and discounts may also be offered by these new entrants to allure fliers, as it is a trend in the aviation industry. Hence, the coming year is looking even better for corporate and leisure travellers. The industry is expecting a sharp jump in the daily Mumbai Chennai, Pune Bangalore and Delhi Ahmedabad flights routes.
The Gurgaon-based budget airline – IndiGo – is one of the most efficient service providers in the industry. It is leading the Indian aviation market with over 32 per cent share. More than 500 flights are operated by the carrier every day from the primary hub at Indira Gandhi International Airport, Delhi. Its fleet size of 80 aircraft includes the latest offerings from Airbus. It provides numerous flights to Lucknow, Delhi, Mumbai, Jaipur and a number of Tier II cities on a regular basis. The carrier also operates international flights, and people who are looking forward to spend their holidays in Singapore or Dubai can opt for its services.
This carrier in many ways has redefined a budget airline by following new strategies and practices. It has been listed as one of the fastest growing airlines of the world. Application of new managerial schemes has led this carrier to the top rank of the chart. Rahul Bhatia, one of the executive chairmen, helped the company in shaping its future as the best airline. Along with giving discounts and offers, the carrier has managed to make profits and has been posting positive results since 2009. In the year 2013, the net profit was reported $130 million, where as the revenue was over $1.6 billion.
It also managed to overcome the criticalities of rising fuel cost and decreasing value of rupee in the international market with the help of efficient strategies formulated at the top level. The IndiGo flight booking pattern was similar and it is believed that net earnings of IndiGo till March 2014 was not shaken by these changes, and was valued at $100 million.
This airline has managed to change the perception of people that low cost does not necessarily mean low quality. It simply means arranging thing in order and offering people what they are looking for. The de-bundling of services allows travellers to pick up services they want during their journey and pay only for them. However, the Economy-plus class service offered by the company adds to the option list of the bookings and comes at more or less at the same cost of Economy class. Along with best-in class services, it has also managed to maintain the on-time performance.
As per latest reports, a significant increase in the load factor of all low-cost carriers has been observed in the last few months. The Sun Group-owned airline – SpiceJet – has recorded more than 85 per cent flight occupancy in the month of September. Flights to Hyderabad, Mumbai, Delhi as well as Tier II cities were almost fully loaded in the studied month. This LCC carried around 4.9 crore people this year. It caters to more than 49 destinations by operating over 300 flights every day. Most of the flights are managed from its primary hub and monitored from the corporate office in Gurgaon. These destinations include domestic as well as international ones. It has a fleet size of over 50 aircraft, including latest models manufactured like Bombardier Dash 8 Q400 and Boeing 737 Next Generation. The airline gained over two per cent market share this year and is behind IndiGo only in the ranking list. However, it has surpassed the leading carrier in terms of flight occupancy.
The latest report gives out a similar picture; IndiGo still leads the market with over 32 per cent shares, followed by SpiceJet (as far as LCCs are concerned). As per reports, because of low-cost fares offered by SpiceJet, the Indian aviation industry saw topsy-turvy curves. The capacity addition and sales announced by the airline operating under the Sun Group attracted fair share of fliers. As a result more deals were offered by most carriers leading to a fare war in the market, which benefitted both – passengers and airlines. This is the reason that almost all carriers operating in the country reported higher load factor during September as per the Directorate General of Civil Aviation (DGCA) data.
Apart from record breaking SpiceJet flight booking, GoAir and JetLite also surpassed the 80 per cent benchmark. Industry watchers are of the opinion that those carriers, which manage to fill 400 (or more than that) seats out of 500 usually post profits in their financial books. However, it is not necessary in case of sales as prices are lower than normal, which in turn may affect the revenue structure. Even if it does not report profit, the operating cost is usually recovered, creating a breakeven point – where no loss or profit is registered.