Mumbai: Budget air-carrier SpiceJet on Wednesday said it has witnessed a healthy improvement in demand and expects to post a 10% rise in passenger traffic this month but low yields still remain a cause of concern.
“After being constantly on the decline for quite some time now, demand for air travel grew by 12% in June and we expect it to grow by 10% in July,” SpiceJet chief executive officer Sanjay Aggarwal said.
Demand for air travel is witnessing an upward trend after a long interval and this is a “silver lining” for the beleaguered industry, he said.
SpiceJet has posted a healthy performance in Q1 FY10 clocking a 15% jump in its revenues, Aggarwal said, adding “however, low yields remain a cause of concern.”
The airline, which declared its Q1 results on Monday, posted a net profit of Rs26.34 crore against a loss of Rs129.22 crore in the year-ago period.
Describing the air-carrier posting a profit as a creditable achievement, he said, “We have been able to squeeze out a profit (even) in this time of gloom and doom.”
However, for the industry to sustain its business, yields need to improve significantly, he added.
Ruling out any further investment in the company at this stage, Aggarwal said, “We are pretty good as regards our cash position.”
To a question whether his airline would consider a fare hike in case of another round of increase in aviation turbine fuel (ATF) prices, Aggarwal said that even if fuel prices were to increase by a certain percentage, SpiceJet has some cushion in the form of fuel hedging.
“We have bought some protection through hedging,” he said, adding that “however, we can protect ourselves only up to a certain point.”
On whether SpiceJet was foraying overseas just like its peers Jet and Kingfisher, Aggarwal said that the airline was presently evaluating various markets.
“We are still on the drawing-board stage and evaluating various international markets,” he said.
As per present regulations, an airline has to operate for five years domestically to qualify for flying overseas.
SpiceJet completes five years of operation in May next year.