Date:16/06/2005 URL: http://www.thehindubusinessline.com/2005/06/16/stories/2005061601910700.htm

Back Spicejet set to break even by June-end: CEO
Withdraws Rs 99 fare

K. Giriprakash

Bangalore , June 15

SPICEJET is set to become the first low-cost airline in India to turn profitable within a month of its launch while it has withdrawn its promotional fare of Rs 99.

"We expected to break even by the end of the six months of launching the airline. We will now actually do so this June itself," the Spicejet Chief Executive Officer, Mr Mark Winders, told Business Line. Spicejet launched its operations on May 17.

Mr Winders said the airline had informed its investors that during the first few weeks, the load factor would not usually be higher than 30-40 per cent. "But within the first three days, our load factor was touching 100 per cent," he said.

To achieve a break even, the airline had calculated that its cost per available seat km should be Rs 2 per km and revenue per available seat km between Rs 2.2 and Rs 2.3 per km. "We expect to achieve this by the end of this June," Mr Winders said. He said airlines can fill up seats if the airfares are "rightly" priced. He said Spicejet is able to earn more from each aircraft because it is able to fly them for more number of hours. Typically, an aircraft flies for about eight hours every day, but Spicejet is able to keep it in air for 11-12 hours.

He said the airline was forced to pull out advertisements after its promotional offer of Rs 99 fare was overbooked within a few hours of its launch. Spicejet had released 30,000 seats for Rs 99 and within a few hours, these seats had been fully booked. The airline has now decided to withdraw the promotional offer of Rs 99 fare and replace it with other offers at a later stage. The current fare structure is slightly higher than AC three-tier train fares and about 50 per cent lower than the economy fares of a regular airline.

Mr Winders said the airline plans to take on lease three more aircraft, Boeing B 737-800s soon to add about eight more cities to its network. It currently has three Boeing 737-800s on lease and flies to six cities. He said Spicejet has added the Bangalore sector since Monday. The airfare ranges between Rs 999 and Rs 6,099. He said the airline has kept away from the Mumbai sector because it wants to stimulate newer markets.