15.1.13

SpiceJet rakes it in



Budget carrier SpiceJet’s bet to stimulate demand through sale of cheap fares for a limited period for the upcoming lean season has paid rich dividends. The airline is said to have raked in over Rs. 160 crore through sale of discounted fares within a period of just three days, which is about 40% of its monthly revenue of . 400 crore through ticket sales.
On Friday, the airline surprised the market by its announcement to sell a million tickets across its network for Rs. 2,013 each.
The offer was for a limited period of three days. The sale of tickets was for travel between February 1 and April 30, a period when airlines struggle to get loads on domestic flights. SpiceJet was able to sell over seven lakh seats out of the total 10 lakh that were on offer.
SpiceJet’s chief executive officer Neil Mills said what SpiceJet implemented was a simple strategy that airlines follow across the globe to garner incremental revenues by offering discounted fares for a very short and limited period through ticket sales.
SpiceJet expects about Rs. 20-25 crore in incremental revenues for the period of three months. The total number of seats available during the period is about 50 lakh, out of which it has managed to sell 10 lakh seats.


People in the know in the airline say the strategy was well thought of and has been in the works for about a month.
The negative industry growth that dipped too low in months of December and January were the reasons why the airline wanted to secure some seats per flight across its network in the lean month of March.
The airline through this sale wanted to first stir the market up as the sentiment currently for travel is very negative and second they wanted to see if the hits are on the website of the airline or the loads will go to the travel agents.
Equity analysts said the move by SpiceJet seems to have paid off as a good strategy because the airline does not have idle capacity for the coming quarter and will have loads of more than 80% and will also have revenues to be realised for these months that has been taken in advance.

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