Low-cost airline SpiceJet Ltd will focus on short duration flights in international routes which are “sweet spots” in terms of profitability. This will reduce the burden of high fuel cost, according to Chief Operating Officer Sanjiv Kapoor.
The flight duration to an international destination should not exceed three hours. The idea is that the flight returns to the base on the same day from an international destination.
A few months ago, the Chennai-based airline withdrew its service to Guangzhou in China from Delhi as the duration was more than four hours, Kapoor told reporters on the sidelines of the company’s annual general meeting (AGM).
SpiceJet is working on reducing the fuel cost and increasing revenue performance. The unit revenue is up by 9-10 per cent year on year, but the cost went up more than that amid high exchange rate and fuel charges. Given such a scenario, turning around an airline takes time anywhere in the world.
Globally, any airline trying to go from worst ever losses to profits would take 18-24 months or in some rare cases, 12 months. “Let’s wait and see how long it will take for us. We are only nine months into the turnaround exercise,” Kapoor said.
Kalanidhi Maran, Chairman of the airline, said: “We are giving our best to turn around the company.”
In its 2013-14 annual report, SpiceJet said it is in the process of consolidation in the market. The company’s management has refrained from additional capacity during 2014-15, and have reduced capacity in the first quarter of the current fiscal. Thereafter, the capacity will remain flat over the next two years.
SL Narayanan, Chief Financial Officer, told shareholders that the airline, when compared to competitors such as Air India and Jet Airways, is reporting reduced losses, which is a matter of consolation.
On the increased competition, Narayanan said while two new airlines have started operations, three new national and two regional airlines are likely to come up. However, as the country’s GDP expands, it will give enough business.