Why is aggression in fleet size increase and pan-India penetration ‘illogical’ for SpiceJet and other LCCs in the current times? B&E’s steven philip warner presents an insight...
“What the hell is going on? It’s a bloody godforsaken route… How can we fly with just five passengers?” shouted a SpiceJet official as we were waiting in the lobby of the carrier’s office in Gurgaon; words that gave us more than just an idea of the ‘discomfort’ prevailing in the LCC camps in the domestic aviation sector. Ten minutes later, we found ourselves seated in a ‘simple’ cabin which belonged to Siddhanta Sharma, Executive Chairman, SpiceJet Limited. There was just one photograph on the wall, that of Mother Teresa, perhaps a sign of what was missing in the hearts of many at SpiceJet and other LCCs – peace! Four cigarette buds snubbed on the ashtray revealed that the man on the desk (we were still waiting for him) had been extremely busy of late. And finally, the cup of black coffee on his table, silent & still… getting colder by the minute, perhaps symbolizing the half-hearted smiles flashed by LCCs who once dreamt of making it big; the only ‘big’ things they got were ‘big’ aircrafts & ‘bigger’ elusive dreams!
Domestic aviation is clearly at a crossroads. While on one hand, players are losing out on precious funds, on the other, rising fares are ensuring a fall in demand by the day for LCCs. Full Service Carriers (FSCs) on the contrary, are gaining lost ground; sad news for the middle-class Indians, is how we put it. Siddhanta justifies the thinning situation as, “As far as the fares are concerned, low cost does not mean that your fares remain low and constant. Also, one reason why market share has gone in favour of some fsc carriers is because they have been adding capacity as well.” If that’s so, why isn’t SpiceJet adopting an aggressive strategy to increase fleet size from the current 17? Explains a logical Siddhanta: “Today is the question of survival! You can’t be aggressive just for the heck of it! We just can’t go on adding capacity illogically. Given our philosophy of maintaining the same aircraft types, there are not many destinations you can go to where you can fill 189 seats every time.”
“What the hell is going on? It’s a bloody godforsaken route… How can we fly with just five passengers?” shouted a SpiceJet official as we were waiting in the lobby of the carrier’s office in Gurgaon; words that gave us more than just an idea of the ‘discomfort’ prevailing in the LCC camps in the domestic aviation sector. Ten minutes later, we found ourselves seated in a ‘simple’ cabin which belonged to Siddhanta Sharma, Executive Chairman, SpiceJet Limited. There was just one photograph on the wall, that of Mother Teresa, perhaps a sign of what was missing in the hearts of many at SpiceJet and other LCCs – peace! Four cigarette buds snubbed on the ashtray revealed that the man on the desk (we were still waiting for him) had been extremely busy of late. And finally, the cup of black coffee on his table, silent & still… getting colder by the minute, perhaps symbolizing the half-hearted smiles flashed by LCCs who once dreamt of making it big; the only ‘big’ things they got were ‘big’ aircrafts & ‘bigger’ elusive dreams!
Domestic aviation is clearly at a crossroads. While on one hand, players are losing out on precious funds, on the other, rising fares are ensuring a fall in demand by the day for LCCs. Full Service Carriers (FSCs) on the contrary, are gaining lost ground; sad news for the middle-class Indians, is how we put it. Siddhanta justifies the thinning situation as, “As far as the fares are concerned, low cost does not mean that your fares remain low and constant. Also, one reason why market share has gone in favour of some fsc carriers is because they have been adding capacity as well.” If that’s so, why isn’t SpiceJet adopting an aggressive strategy to increase fleet size from the current 17? Explains a logical Siddhanta: “Today is the question of survival! You can’t be aggressive just for the heck of it! We just can’t go on adding capacity illogically. Given our philosophy of maintaining the same aircraft types, there are not many destinations you can go to where you can fill 189 seats every time.”
Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).
and Arindam Chaudhuri (Renowned Management Guru and Economist).
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