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.
As per recent reports, the cost of last-minute flights is costlier amid discounts and offers announced in this festive season. Around 20 discount offers were rolled out by India-based airlines in previous 10 months and flight tickets booking was cheaper than normal. When compared with the statistics of previous year, the number of fliers registered 28 per cent hike in the month of September. The cost of making seat reservation was lower in general, but last-minute flights were costlier.
According to industry watchers, carriers are charging 10 per cent higher amount for offering seat in their aircraft. With this pricing strategy they might be able to recover the revenues forgone due to various schemes. It serves dual purpose for airlines; on one hand, it attracts fliers by offering cheap tickets in advance that increases the flight occupancy. While on the other hand, they do not have to compromise with low revenues as high-priced ticket reservation at the last minute makes up for it.
After analysing the SpiceJet flight booking trends and figures, its chief operating officer (COO) said that in the first quarter, their revenue available per seat kilometre (RASK) was increased by 10 per cent. RASK gives a true picture of increase in the booking instead of average fares, loads or yields. It is expected that the industry reports may show a fair recovery and narrower losses in the third quarter in comparison with the results of the previous year. The new pricing strategy will play an important role in neutralising the balance sheets. Apart from this, changes in the exchange rate and cut in the fuel prices also affected the revenue earned by carriers.
This new practice has changed the flight seat reservation trend in country and most people are making advance bookings. About 45 per cent of the total bookings were made over 30 days before the journey date and it was only 35 per cent two years back. Online ticket reservation is the second biggest change noticed in the past few years. Most travellers are now booking air tickets online while the number of people getting it from the counter has become low.
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.