Consolidation good for aviation industry: SpiceJet

Ajay Singh, Director, SpiceJet, expects the airline load factor to be around 70%. He said low cost airlines were doing better than full service airlines. “We can see a definite shift in traffic towards the low cost carriers which now account for over 50% of the market.”
Ajay Singh, Director, SpiceJet, expects the airline load factor to be around 70%. He said low cost airlines were doing better than full service airlines. “We can see a definite shift in traffic towards the low cost carriers which now account for over 50% of the market.”
Q: The monsoons are not the best of times for airline companies. What kind of load factors do you think you can manage in this and the next quarter compared to what you did last year?
A: We expect that the load factors will be in the range of about 70%. I think this will be comparable or a little better than what happened last year because since last year, there has been some rationalisation of capacity primarily by the full service carriers. So, we do hope that we can hit the 70% mark.
Q: Would airline companies like yours be tempted to offer even lower rates? What does this do to your breakeven point? Are you reaching breakeven this year?
A: We hope to. We have gone through one quarter of this year. Our target is to ensure that we breakeven and make some money this financial year.
Q: When we speak to some of the pilots, they tell us that the situation on the ground is so bad and I am not talking about your airline but generally that airports are saying pay for the fuel if you want to take the aircraft off the ground and basically they are paying up at that point. Where do we go next? Do airlines with yourself merge with JetLite or JetLite merges with you or Kingfisher Red sells off to you? Which way is it going to go? What is going to happen?
A: For one, the low-cost airlines are certainly doing better than the full service airlines. I think we can see a definite shift in traffic towards the low cost carriers, which now account for in excess of 50% of the market.
You’ve seen that after disbelieving or scoffing at the low fare or low-cost model, full service airlines like Jet and Kingfisher themselves are trying to expand their low cost operations. So, certainly, there will be a significant shift of traffic towards the low cost carriers.
02/07/09 CNBC-TV18/Moneycontrol.com

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Categories: SpiceJet Jul 2009