SpiceJet's "cheaper-than-train-fares" sale, announced on Wednesday, is aimed at battling the lean season and getting rid of excess inventory, the budget carrier's chief operating officer Sanjiv Kapoor told NDTV.
"These schemes are actually designed to get rid of excess inventory or get rid of seats that would otherwise fly empty and therefore are positive for the revenues and bottomline," Mr Kapoor said.
SpiceJet is selling one-way air tickets for as low as Rs 599 (all-inclusive), making it the cheapest offer announced so far this year.
SpiceJet's latest offer is for travel between July 1 and October 24, 2015; bookings can be done between February 11 and 13 (both dates included). The fares are non-refundable and non-changeable.
The airline expected 15 per cent of the seats to fly empty during the season and hence floated the offer to address the issue.
"No point in charging the full fare, having the seats go empty. It's better to give a discount and have somebody sit in that seat as long as it's covering the marginal cost of carrying the passenger. So it's actually very simple basic economics," he said.
Other budget carriers such as IndiGo, India's biggest by market share, and GoAir have also announced aggressive discounts on advance travel over the past two weeks.
"Once the airline seat takes off its gone forever, you can't put it back in the shelf and sell tomorrow. So rather than have a take off empty we want it to take off with some contribution, with some revenue as long as it covers the cost of carrying that incremental passenger then we are better off and that is exactly what these schemes are designed to do," Mr Kapoor said. (Watch)
SpiceJet is undergoing changes under a new management, but it has not given up on its strategy of aggressive discounts, a trend it started last year. Last month, its board approved selling shares worth up to Rs 1,500 crore in the company, following a deal between its current majority owner and co-founder Ajay Singh leading a rescue plan.
Mr Singh, who helped found the airline in 2005, agreed last month to buy a controlling stake from billionaire majority owner Kalanithi Maran's Sun Group in a bid to turn around the money-losing airline.
"That is sending a very strong positive emotional message to all of our staff many of whom have been there from the start, that the airline is going back into the care of the person who helped start it. It's a very powerful, emotional connection there. And Ajay also has a very strong view and understanding of the business and we expect to benefit from that," Mr Kapoor said.
SpiceJet, which was forced to cut its Boeing 737 fleet from 42 to 19, said it hopes to up the number to 26 aircraft before the start of the summer schedule.
"So the total Boeing count is down from 42 to 19 and it would be back to 26 at the start of the summer schedule and we expect to grow it back to 35 in the coming quarters," Mr Kapoor said.
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