Ashwini Phadnis
The Delhi-based low-cost airline, SpiceJet recently announced that it will be acquiring up to 30 Bombardier aircraft to expand operations in Tier II and III cities. In a recent interview with Business Line, the airline's newly appointed Chief Executive Officer, Mr Neil Mills outlined some of the airline's plans.
Excerpts from the interview:
What will be the focus of SpiceJet under your leadership?
The short-term focus is to make low-cost travel widely available to more people. The tool that we are using for this is smaller aircraft (the airline recently ordered 30 Bombardier aircraft), which will allow us to access more metros.
What will this do to fares and the number of passengers you carry?
Passengers will obviously grow considerably. Although these are smaller aircraft, they do more flights per day because the flights tend to be shorter — about one hour to one hour twenty minutes within a sector, on an average. These will regularly be between metros that currently have either limited connections or no connections.
Could you expand on that, given your focus in the South?
It is not really a focus in the South. It is just that in the short term, because of the infrastructure constraints in the North, there are more opportunities in the South. And if you look at the transport movement today within India, it is hugely north focussed. There are a lot more flights every day between cities in the North than in the South. And the population, although higher in the North, is not proportional to the volume of traffic.
So, are you saying that there is greater opportunity in South India than in other places?
No. The whole of India is an opportunity for us. We can keep expanding the volumes here. It is a huge volume market. But in the short term, because of infrastructure constraints, particularly in the two major metros in the North, the South has more opportunities.
What does ‘short term' mean for the airline?
Probably the next 18-24 months. But look at the volume of growth we are going to have — we have 22 aircraft today and, with this regional operation, we are looking at somewhere around 75 aircraft by the end of 2013. These will be a mix of Boeing and regional aircraft.
How will this impact the customer experience and fares?
The unique selling point is going to be convenience. But you can only push convenience so far based on the price because people will make logical decisions —as in ‘this costs so much so I will drive'.
Today, there may be indirect air connections but this means that it takes six to seven hours to do a two-hour journey. We would like to try and make that more convenient.
Access to Tier II and Tier III cities is about giving people the choice; the fares will be low because we are a low-cost carrier. But ultimately we also have to make money.
Who will you be targeting?
It will certainly be the first AC, and maybe the top end of the second AC train travellers. Also, a lot of people in these metros just drive or do not make the journey. We want to increase the ability and willingness of people to travel by offering a low-cost alternative that is easy to access.
The proposal for getting a second variety of aircraft has been on the airline's drawing board for some time. What was the trigger point this time?
Several factors came together. Obviously, the growth that has happened since 2008 was a real factor. You cannot make long-term decisions on aircraft based on six months' performance as it is a huge financial commitment.
We are now beginning to get that track record. We have more direction for the company going forward. We are in a better financial position.
Moving forward, what can a passenger expect from SpiceJet?
The service that we deliver will be more of the same. We are not going to add frills. We are going to make it a reliable service that is easily accessible for an affordable price, as we do today for the 23,000 people that travel on our flights.
Have you decided where the regional aircraft will be stationed?
The first aircraft arrives in the end of June 2011. We have a shortlist of airports that we talking to. But we would not like to disclose the names just yet.
Are they all in the South?
They are not all in the South. But, obviously, because of the infrastructure availability, there is a good chance that the first one will be in the South. We take seven Bombardier aircraft in the first year, which means this will saturate one base.
So, we will be looking for the second one less than 12 months from the start of operations. Even if the first one is in the South, that is only the beginning of the game.
What kind of a mix will you see between domestic and international operations?
International is not going be a large proportion of our business. Not now and not by the end of 2013. It is always going to be a small portion, going forward. At the moment, it is just four flights of the more than 150 flights. It may grow slightly in proportion but it will not be a significant portion of our business. Domestic India is where we see the biggest opportunity.
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