Trailblazer

Introducing the spice of flight

A low-cost model fused with a sophisticated product has made SpiceJet the inevitable candidate for leadership in India's fastest growing segment of domestic aviation, finds Bhisham Mansukhani

India's domestic aviation space was regarded with the courtesy of a somewhat cottage industry until the sudden burst that witnessed a combination of government reform and private enterprise, making it virtually a household subject and eventually a household option of travel - a far cry from its initial elitist stigma.

The success, if not sustenance, of India's first low-cost carrier, Air Deccan, inspired the emergence of competition, although once the hype settled, there remained and still does, only one relatively serious challenger in terms of fleet and network growth and a well-regarded benchmark for quality in the parsimonious business of low-cost aviation.

SpiceJet has, in over a year's operation (commenced operations in May 2005), racked up a sizeable fleet and network, healthy load factors, turned in a profit and, like Air Deccan, introduced several layers of India's population to the medium of flight, years before the existing legacy carriers would have hoped to. In that sense, the airline has not just won the tough battle of operating in one of the world's most expensive and indifferent low-cost aviation markets, but helped forward a culture which the Americans have long embraced and prided over while most Indians have merely aspired to. The carrier which began with a modest fleet of two Boeing aircraft on what critics regarded as the most convenient route of Mumbai-Delhi has now quietened its detractors by developing profitable routes that its more seasoned peers cited as unviable.

Today, its network covers all of India, touching down in the cities of Ahmedabad, Bangalore, Chennai, Delhi, Goa, Guwahati, Hyderabad, Jammu, Kolkata, Mumbai, Pune and Srinagar. Says Ajay Singh, its director, "We are one billion people but there are just 15 million air trips a year. Compare this with Malaysia where, with a population of 28 million people, there are 15 million air trips annually, or with China, where 140 million air trips are made every year, and you will see the huge potential that is waiting to be tapped."

Critics have lauded the carrier for its multidimensional approach towards distribution that hasn't relied on portal hits alone. While Internet bookings have accounted for 78 per cent of sales, 18 per cent was driven through the airline's call centre and travel agents have accounted for almost five per cent. It has tied up with Navitaire, a low-cost support for reservations and revenue management for e-booking and e-ticketing facilities and has integrated its reservation system with MakeMyTrip's search engine.

From August onwards, the airline's inventory will be distributed via the Galileo Flight Integrator, a low-cost airline software which will give it access to 7,000 travel agency locations within India. Given that SpiceJet seeks to almost double its current monthly inventory of 2,80,000 seats to 5,00,000 by 2006 end, the tie-up with Galileo couldn't have been timed better. The carrier has also tied up with SBI Card (two million credit card user base) for a co-branded credit card, to induce cashless purchase of tickets offline. SpiceJet will also open new routes and connect tier-I and II cities. That apart, it has created a network of 65 Spice shops countrywide that will allow customers to make phone bookings.

The results are not surprising. In fact, by continually exploring routes that are under-serviced and opening up new venues for distribution, SpiceJet has set an encouraging benchmark for the industry, rubbishing the doomed outlook on domestic Indian aviation. SpiceJet has already captured six per cent of the market share and logged a 92 per cent load factor as recently as May 2006. In April, it had already broken the 95 per cent passenger load factor barrier. Its CEO Siddhanta Sharma, says, "We are seeing unprecedented growth in the aviation sector and are confident that we will receive even better response in days to come."

While the airline currently has a fleet of six aircraft operating 49 daily flights, a further 23 aircraft will be inducted by 2008 end. The entire fleet, including the new aircraft, are Boeing 737-800 s, wide-bodied with a capacity to seat 189 all-economy passengers. Chennai is being positioned as the carrier's southern hub with more flights into Ahmedabad and Jaipur. Coimbatore, Kochi and Thiruvananthapuram will also be subsequently connected to Mumbai.

The airline is continually eyeing underserved sectors that are highly reliant on the rail network. Its has already created a low-cost niche on its own with urbane aircraft interiors that match its full service peers in presentation and complimentary snacks and water that challenge the impression of stingy low-cost aviation. In-flight advertising, cargo and night flying have also helped in generating alternative revenue and bringing down costs. This is evident in the financial reports it posted for the first quarter of the current fiscal - a profit of Rs 4.3 crore. According to an analyst with a brokerage firm, SpiceJet will break even in the current fiscal. SpiceJet, often likened to perhaps the world's most successful low-cost carrier, SouthWest, isn't the most unlikely candidate for India's best low-cost carrier.