A day after announcing an aggressive three-day sale that offers discounts of up to 75 per cent on air fares, SpiceJet said it is ready for price wars with rival carriers.
"There are five players and everybody is slugging out for market share. We have done what we believe is good for our interest, for driving up utilisation. If the process triggers some retaliatory action, we are prepared for that," SL Narayanan, CFO of Sun Group told NDTV on Tuesday. (Watch video)
SpiceJet's Monday announcement, called the 'Super Sale Summer Offer', offers up to 75 per cent discount on travel between April 1, 2014 and June 30, 2014. This is the third time SpiceJet is offering tickets at discounted prices in the last one month.
Following SpiceJet's announcement, its rivals GoAir and IndiGo announced their own sale offers late in the evening. GoAir announced up to 70 per cent reduction in fares for booking in the next three days, starting Monday. IndiGo came out with discounted tickets on select sectors.
Mr Narayanan said the aggressive cut in fares was aimed to induce demand among discretionary travellers.
"The last time we announced discounting scheme it was highly targeted towards the leave season ending March 31st and this is the time the loads are generally low. It has served us well and gotten rid of some inventory which would otherwise have gone unsold," he added.
Like previous sales, SpiceJet has put up limited number of seats for sale and the offer is mostly on afternoon flights, when loads are not full, the company said.
"In trunk roots early morning and late evening flights get filled to optimum capacity. However, during noon time not many people travel. So we are trying some of the inventory that would otherwise go unsold gets picked because of attractive pricing schemes," Mr Narayanan said.
SpiceJet is also contemplating to hike fares because the dollar has appreciated by almost 20 per cent in last 12 months, Mr Narayanan said. Dollar-linked Aviation Turbine Fuel (ATF) accounts for nearly 40 per cent of total input costs of domestic airlines.
"The price increase is inevitable and the demand adjustment will follow naturally. We are expecting that by June quarter we would be back to better level of productivity," Mr Narayanan said.
SpiceJet shares traded 0.73 per cent lower at Rs 13.60 on the BSE as of 2.30 p.m. It outperformed its rivals - Jet Airways, down 1.1 per cent and Kingfisher, down 1.4 per cent, but underperformed the broader BSE Sensex, which traded 0.2 per cent higher.
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