Contradicting the media report which says that SpiceJet’s international flying rights may be in jeopardy as our fleet may fall to below 20 aircraft, SpiceJet has said that 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.
According to SpiceJet, it has been reported in some media that our payables to suppliers is Rs 1600cr, and that we have been directed by the DGCA to clear these payments by Dec 15. First, our payables to suppliers is significantly less than the Rs 1600cr number being erroneously quoted. Second, the DGCA has not asked for all payables to be cleared by Dec 15, it has asked for a payment plan to be shared with them by Dec 15.
It has also been reported in some publications the SpiceJet’s fleet reduction is somehow related to its discount fare sales strategy. Once again we want to emphasize 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. This is global best practice for LCCs, and SpiceJet’s advance discount sales strategy has resulted in revenue increase of 15% in the last quarter year-on-year, more than double the rate of capacity (ASK) increase. It resulted in unit revenue (RASK) increase of 12% YOY for the quarter, a feat that is not easy to achieve YOY anywhere in the world. It resulted in losses for the last quarter being reduced 50% year-on-year. It has resulted in market growth of 15-25% YOY 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.
There have also been some media comments relating to heightened safety oversight. SpiceJet wants to emphasize that safety is its top priority, and it has never, and will never, take short cuts on safety. It is proud of its unblemished safety record in over 9 years of operation. Every day we put ourselves and our own family members on our flights, with complete confidence as we know there is nothing to worry about regarding safety, there is no compromise on it. The Hon’ble 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.
