International rights not in jeopardy, clarifies SpiceJet

By: |
Chennai | Published: December 8, 2014 12:50:57 AM

Also objects to reports on R1,600-cr dues to suppliers

A Spicejet plane with 146 people on board hit a buffalo while proceeding for take-off in Surat. (Reuters)Spicejet also took objection to reports about its dues to its suppliers. (Reuters)

Kalanithi Maran- promoted low-fare airline SpiceJet, which has been going through a rough patch, has dismissed reports that its international flying rights may be in jeopardy due to curtailment of some of routes.

In a statement issued on Sunday, Spicejet said: “It has been reported in some newspapers that SpiceJet’s international flying rights may be in jeopardy as our fleet may fall to below 20 aircraft. This is absolutely incorrect and false information as our fleet is currently 37 aircraft, well above the limit of 20. These newspapers neglect that fact we also have 15 Bombardier Q400s in our fleet, in addition to 22 Boeing 737s.”

The airline also took objection to reports about its dues to its suppliers.

“It has been reported in some media that our payables to suppliers are Rs 1,600 crore, and that we have been directed by the DGCA to clear these payments by December 15. First, our payables to suppliers are significantly less than Rs 1,600 crore, the number being erroneously quoted. Second, the DGCA has not asked for all payables to be cleared by December 15; it has asked for a payment plan to be shared with them by December 15,” it said.

On reports that its fleet reduction was somehow related to its discounted fare strategy, the airline said: “Once again we want to emphasise that it has nothing to do with our pricing strategy or operational performance. Our new business and pricing strategy, adopted in early 2014, looks to boost loads through advance purchase sales to ensure we fly as few empty seats as possible, and boost yields through close-in pricing.”

According to SpiceJet, this was the global best practice for LCCs and SpiceJet’s advance discount sales strategy has resulted in a revenue increase of 15% in the last quarter year-on-year, more than double the rate of capacity (ASK) increase. It resulted in a unit revenue (RASK) increase of 12% y-o-y for the quarter, a feat not easy to achieve anywhere in the world. It resulted in losses for the last quarter falling 50%
y-o-y. It resulted in market growth of 15-25% y-o-y each month due to SpiceJet-led demand stimulation, with significant benefits to the travel ecosystem and the overall economy.

“Once again, there is absolutely no connection between our operating performance and pricing strategy, and our current fleet re-sizing. Those who make this false connection either choose ignore the facts that are clearly seen in the data, or do not understand basic airline operating and revenue metrics,” it said.

Taking exception to reports relating to heightened safety oversight, SpiceJet said safety was its top priority and it has never, and neverwill, take short-cuts on safety.

“The aviation minister himself has stated to the media that the safety oversight was a routine process and was not related to any specific safety issues or concerns,” SpiceJet said.

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