SpiceJet to retail goods on board

New Delhi: Betting big on ancillary revenues, SpiceJet has entered into a joint venture with UK-based online retailer Under Five Pounds to sell jewellery, watches and other merchandise on board. Earlier, the airline won a government tender to carry mail and will carry post from next month.
The low-cost carrier expects to be close to break-even by the end of this fiscal year. “Our cost is lowest in the industry. That is why we will be the first LCC to break even. We are also looking at profits by end of next year,” SpiceJet CFO Partha Sarathi Basu told ET. According to an ICICIdirect Research report, SpiceJet’s per unit (seat) cost is 20% lower than other airlines in the LCC segment and 40% lower than players in the full-service carrier segment.
Ancillary revenues include revenue from excess baggage, on board food sales, advertisement and contests on board, among others.
At present, around 7-7.5% of the revenue comes from these sources. The airline earns around Rs 1.5 crore per month from courier on board. The revenue is set to increase once the new JV company launches on board merchandise sales from next month. After 4-6 months, the airline’s website will also be selling these items.
15/12/07 Vishakha Talreja/Economic Times

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Categories: New Dec 2007, SpiceJet Dec 2007