SpiceJet gets nod to fly to 3 foreign destinations

SpiceJet gets nod to fly to 3 foreign destinations
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First Published: Thu, May 13 2010. 09 16 PM IST
Updated: Thu, May 13 2010. 09 16 PM IST
New Delhi: Indian discount carrier SpiceJet Ltd has been cleared to fly overseas in June, starting with Dhaka, Kathmandu and the Maldives, after the airline completes five years of domestic service later this month.
The aviation ministry has, however, turned down its request to start flights to Sri Lanka for now, said two officials with knowledge of the matter.
The Gurgaon-based low-cost airline had shortlisted four overseas destinations for the first phase of its international operations, Mint reported on 18 January. The government requires that airlines complete a minimum five years of service before being eligible to fly abroad.
One of the civil aviation ministry officials cited above said the carrier has been granted rights for daily flights to Dhaka and Kathmandu starting 1 June. The Mumbai-Maldives service will start in the winter, he said.
SpiceJet, with a 12.6% domestic market share and 19 aircraft, plans to confine flights to the South Asian Association for Regional Cooperation (Saarc) region only, CEO Sanjay Aggarwal had said in January.
It is not clear when the carrier will actually launch the operations. Aggarwal could not be reached for comments and an email sent to him remained unanswered.
While “in-principle” approval has been granted, it has yet to be issued in “black and white”, said a SpiceJet official who did not want to be named as he is not authorized to speak with the media.
It may take the airline all of June to prepare for international operations, depending on clearances from aviation regulator, the Directorate General of Civil Aviation.
The country’s carriers that fly overseas are Air India, Jet Airways, Kingfisher Airlines and JetLite, making SpiceJet the fifth to do so.
It will also be the first domestic budget airline to fly abroad, pitting it against regional carriers such as FlyDubai, AirAsia and Air Arabia among others.
The airline’s ability to profit from overseas services will depend on how it operates the low-cost model, an analyst said.
“Every service comes at a price and not everybody wants all the services,” said Mahantesh Sabarad, analyst at Mumbai’s Fortune Equity Brokers India Ltd, referring to competition from full-service carriers. Apart from picking less-crowded time slots, “the challenges could be on the operational side in their ability to turn around the aircraft for other operations,” he said.
Given that the airline is not entering mature markets, it may not have to contend with the difficulties that carriers such as Jet and Kingfisher faced when they started long-haul European and US operations in the past four years.
“What happened with Kingfisher or Jet was that they went into mature markets which are difficult to make profits in,” Sabarad said. “I tend to believe if they use the same set of aircraft and work them around, then they are essentially utilizing their fleet more efficiently so it would mean for the same fixed cost all they need is the variable expense of flight, primarily fuel. If they are able to attract passengers with cheaper fares that cover their variables they should be adding to the profits.”
tarun.s@livemint.com
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First Published: Thu, May 13 2010. 09 16 PM IST
More Topics: Spicejet | Kathmandu | Dhaka | Maldives | Sri Lanka |