SpiceJet may find Q2 also tough

Hyderabad: Irrational pricing of fares and excessive competition adopted by the airline industry could crimp profit margins of low-cost carrier SpiceJet for the second consecutive quarter, a senior official told ET on conditions of anonymity.
Despite an impressive 35% growth in its revenues in the first quarter this financial year, SpiceJet made losses amounting to 79 crore as competition from full-cost carriers stopped the company from raising ticket prices.
Even higher fuel cost restrained the airline from charging the passengers an increased fare because the full-fledged carriers reduced prices to increase load factors and gain market share. Since July 2010, low-cost carriers reduced their fares by 11% despite aviation turbine fuel (ATF) prices increasing by 40%. ATF accounts for one-third of the operating cost of an airline.
16/09/11 Deepika Amirapu/Economic Times

To Read the News in full at Source, Click the Headline

Categories: spicejet Sep 2011