Sunday, December 7, 2014

#SpiceJet (@flyspicejet) issues clarification on its fleet size reduction

India's second-biggest budget carrier SpiceJet has stated that its fleet size will remain well above 20 aircrafts. 'It has been reported is some newspapers that SpiceJet’s international flying rights may be in jeopardy as our fleet may fall to below 20 aircraft. This is absolutely incorrect and false information, as our fleet is currently 37 aircraft, well above the limit of 20. These newspapers neglect that fact we also have 15 Bombardier Q400s in our fleet in addition to 22 Boeing 737s.'according to a press statement from SpiceJet. The loss-making budget carrier flew 42 Boeing planes at the end of last year, and it has cut its daily flights to 275 from 340, said its CEO Sanjiv Kapoor to Reuters in a telephone interview.

'It has also been reported in some publications the SpiceJet’s fleet reduction is somehow related to its discount fare sales strategy. Once again we want to emphasize that it has nothing to do with our pricing strategy or operational performance. Our new business and pricing strategy, adopted in early 2014, looks to boost loads through advance purchase sales to ensure we fly as few empty seats as possible, and boost yields through close-in pricing. This is global best practice for LCCs, and SpiceJet’s advance discount sales strategy has resulted in revenue increase of 15% in the last quarter year-on-year, more than double the rate of capacity (ASK) increase. It resulted in unit revenue (RASK) increase of 12% YOY for the quarter, a feat that is not easy to achieve YOY anywhere in the world. It resulted in losses for the last quarter being reduced 50% year-on-year. It has resulted in market growth of 15-25% YOY each month due to SpiceJet-led demand stimulation, with significant benefits to the travel ecosystem and the overall economy. Once again, there is absolutely no connection between our operating performance and pricing strategy, and our current fleet re-sizing. Those who make this false connection either choose ignore the facts that are clearly seen in the data, or do not understand basic airline operating and revenue metrics.'said a press statement from SpiceJet issued today.