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SpiceJet plans to fly overseas

By Surajeet Das Gupta & Mihir Mishra
October 15, 2009 03:07 IST
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Low-cost carrier SpiceJet Airlines, promoted by a group of investors led by the Kansagra family and Delhi-based Ajay Singh, is working on a plan to start international operations next year, making it the third private Indian carrier after Jet Airways and Kingfisher to fly overseas.

The airline qualifies for international operations from June next year after it completes five years of domestic operations, the minimum stipulated by the government.

The airline plans to fly mainly to SAARC countries, south-east Asia and select west Asian routes rather than long-haul routes, such as London and New York as Jet and Kingfisher have done.  "We are planning our international launch carefully and will fly only on routes that we think are under-served or have potential for more flights," said Sanjay Agarwal, chief executive officer, SpiceJet, in an interview to Business Standard.

Agarwal explained that the airline would start operations in sectors in which SpiceJet's Boeing 737 fleet can fly.

On competition from low-cost carriers in west Asia like Fly Dubai and Air Arabia Aggarwal conceded that while the competition is tough, their strategy would be to service markets that are still under-served from India. These routes could include Riyadh and Dammam in Saudi Arabia . Aggarwal also pointed out that routes like Mumbai-Kathmandu, Chennai-Singapore are still viable and provide potential for growth.

The New Delhi-registered airline has a market share of 13.2 per cent and is the second-largest low-cost carrier in terms of market share. It operates 127 daily flights and has a fleet of 19 aircraft.

As of now, three Indian carriers  -- Air India, Jet Airways and Kingfisher Airlines --  fly international. Air India is the leader, with 25.7 per cent market share, followed by Jet Airways and Kingfisher Airlines with 9.7 per cent and 0.9 per cent respectively.

Air India also operates a low-cost international airline called Air India Express that caters mainly to the west Asian markets. SpiceJet will be second low-cost airline to fly international from India.

SpiceJet is the only listed low-cost airline to show a profit in the first quarter, bucking the trend in an industry that is facing a major slowdown. The airline made a Q1 net profit of Rs 26.3 crore primarily by focusing on costs, which they claim are virtually half that of a full-service carrier.  

Jet and Kingfisher posted losses of over Rs 500 crore each, mainly on account of international operations. State-owned Air India, meanwhile, is making losses of over Rs 7,200 crore and is examining ways to cut costs by over Rs 3,000 crore annually.

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Surajeet Das Gupta & Mihir Mishra
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