Special discount fares fail to get SpiceJet more passengers

NEW DELHI: Low-cost carrier SpiceJet’s special discount fares, which began in January has not helped the airline carry more passengers.

For the month of March 2014, the airline carried 11% fewer passengers as compared to the same month last year. During the month, SpiceJetBSE -4.23 % carried 9.41 lakh passengers, compared to 10.58 lakh passengers in the same month last year.

The data was retrieved from the DGCA website.

The increased capacity meant that the airline’s average load factor during March 2014 fell sharply to 68.9% while in the same month last year the low-cost carrier was flying its planes 76.1% full on an average.

The statistics are alarming for SpiceJet whose first two offers of the year launched on January 21 and January 31. The January 21 offer was a three day discount window for 30-day and 60 day advance booking till April 15 while the January 31 offer was also a three day window for 30-day advance bookings till April 15.

The fall in SpiceJet’s numbers is also significant in light of the data that overall air passenger traffic in the country grew, but at a snail’s pace of 1.8%. In March 2014, a total of 51.66 passengers were carried by domestic airlines as compared to 50.73 lakh passengers in the same month last year.

Despite the fall in passenger numbers, SpiceJet managed to gain marginally in terms of market share when compared to February 2014 by ending March at 18.2% market share as compared to 17.9% in the previous month.

SpiceJet has racked up a net loss of 923.37 crore in the first nine months of the fiscal 2013-14 ending December 31. Despite a net worth of negative Rs 603 crore, the airline has maintained that it is not strapped for cash and the discounting has been intelligent “revenue management.”Given the passenger numbers for March, I do not see a significant improvement in yield increase for SpiceJet,” said an analyst with a global brokerage firm. The person did not wish to be quoted as they are not authorised to speak to the media directly.

“The definitely need cash infusion in the next year because the rate at which they are accumulating losses will leave the net worth at a high negative value.”
Aviation consultancy firm Centre for Asia Pacific Aviation expects SpiceJet’s fourth quarter loss to be in the region of Rs 250-300 crore.

IndiGo, which also followed SpiceJet immediately on its discount offers, increased market share to 30.99% in March from 29.6% in February as it carried 12.4% more passengers as compared to the same month last year.