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The Hindu : News / National : Flying high

News » National

Published: January 19, 2013 23:12 IST | Updated: January 20, 2013 04:51 IST ​

Flying high

Lalatendu Mishra

What caught the market off-guard was SpiceJet’s decision to sell a large part of its inventory at 70 per cent below the market rate. File photo: AP

AP

When SpiceJet came up with its Rs.2,013 offer on ten lakh tickets, it was an instant sell-out. Rival carriers are scrambling to respond, and the traveller is all smiles.

This is lean season and airlines are lowering fares. In a high airfare regime, demand for air travel is shrinking, causing concern among airlines. So when SpiceJet last week made a dramatic offer, everyone stood up and took notice. SpiceJet’s one million (10 lakh) seat cheap fare offer was something people made a dash for. In 72 hours, seven lakh seats were sold at Rs. 2,013 a ticket (all inclusive) across the network of the low-cost airline. Travel under the scheme is valid from February to April, a time when airlines fly with over 30 per cent empty seats. The current travel trend is negative. November and December 2012, considered peak months, witnessed a growth regression of 7.28 per cent and 4 per cent respectively, compared with November and December 2011. Rising airfares had an impact on growth by 3.4 per cent in the January-December 2012 period, compared with the same period in the previous year. The January-April period is lean as families and travellers avoid travel. In this backdrop, Spicejet’s offer was an instant success. All the tickets could have been sold out but for a slow functioning server. It is believed that SpiceJet was forced by the Directorate-General of Civil Aviation (DGCA) to stop the offer as it could hurt other airlines. SpiceJet did not comment. Explaining the rationale, SpiceJet Chief Executive Officer Neil Mills told The Hindu: “We offered 20 per cent of our 50 lakh seats, which could have gone empty in the lean season. We...