SpiceJet to raise fares, cut costs
09 Apr 2011
Hyderabad: Budget carrier SpiceJet said Friday it would launch a two-pronged strategy to protect the company's net profits from rising crude oil prices. The low-cost operator reported a 13 per cent decline in net profit for the quarter ended December 2010 on account of increasing fuel prices and taxes.
Gurgaon, Delhi headquartered SpiceJet is the country's second largest budget carrier.
The two-pronged strategy would involve an increase in fares as well as working on efficiencies and containing costs.
''We have devised a two-pronged strategy to ensure margins remain unaffected. One is to pass on the burden to customers by increasing air fares. But how much increase and when we will do that is yet to be figured out. Secondly, we continuously work to improve efficiencies and contain costs,'' said Neil Mills, CEO, SpiceJet Ltd.
Speaking to the media after signing an agreement with GMR Hyderabad International Airport Ltd, which will be the hub for SpiceJet's new fleet of Bombardier Q-400 aircraft, he said, ''We would like to increase fares as soon as we can, because we are already paying high ATF.''
Recently, oil companies increased aviation turbine fuel (ATF) for the twelfth time since October 2010. The price has gone about Rs850 to Rs1,000 per kilolitre across various cities. Since October last ATF prices have gone up by about 45 per cent.
Other airlines such as Kingfisher and Jet Airways have also indicated that increase in ATF rates would force them to raise airfares or fuel surcharges.
SpiceJet is India's only profitable listed airline and has declared a profit for the last five successive quarters.