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AirAsia effect? SpiceJet to reposition itself

Budget airline plans advertising campaign, improvements in service in efforts to carve a niche for itself
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First Published: Mon, Mar 25 2013. 09 44 PM IST
SpiceJet has a 18.4% share of the domestic airline market. Photo: Reuters
SpiceJet has a 18.4% share of the domestic airline market. Photo: Reuters
Updated: Mon, Mar 25 2013. 11 13 PM IST
New Delhi: Kalanithi Maran’s budget airline SpiceJet Ltd is working on repositioning itself as a so-called value airline with an advertising campaign and plans to improve in several areas, according to two people familiar with the matter.
In industry parlance, a value carrier is one that focuses on short-haul operations, high asset utilization, few aircraft types, low distribution costs, flexible employment conditions and low on-board product costs.
The plan has been in the works since November and is being speeded up now with Malaysia’s AirAsia Bhd and Tata Sons Ltd set to jointly launch a low-fare airline in India. Besides, its main rival IndiGo has become India’s largest airline by domestic passenger market share as per January data.
SpiceJet’s management is considering using the coinage “Valyou” in the ad campaign to communicate to passengers that they are valued the most when they fly SpiceJet and that they get the best value for money spent on buying tickets, food, merchandise or any other service from it, said one of the two officials mentioned above, declining to be named. Mint could not independently ascertain this.
“It’s obviously to see that the value that we deliver to the customers every day is fully recognized and valued by them,” this person said, referring to the campaign plan.
The campaign will first seek to address employees through internal communications and then passengers with print and TV advertisements.
SpiceJet did not offer any comments for the story.
SpiceJet has a 18.4% share of the domestic airline market, while IndiGo has 27.4%, GoAir has 7.6%, and Jet Konnect 6.2%. Full-service airlines Jet Airways (India) Ltd and Air India Ltd have 20% and 20.3% market share, respectively.
SpiceJet has been working on improving its product since November, said the second person of the two cited above.
As part of this, chief executive Neil Mills pointed out to executives areas that could be “improved” using some 200 pictures from SpiceJet’s domestic and international networks to make his point.
“A lot has been done and more is likely to follow,” the person said, also requesting anonymity. In India, airlines reeling from losses have been reducing spending on advertising and SpiceJet’s campaign too could suffer from budget limitations, the second person said, adding that the management is set to decide on this soon.
IndiGo launched an international campaign when it began flying abroad in 2011, and Air India last year launched a brief campaign that showed corporate executives using the airline.
Saj Ahmad, a London-based aviation analyst, said both SpiceJet and IndiGo are strong brands in India.
“Both are seen as very strong brands with a robust image and an aura of what India’s economic growth can deliver. Low-cost airlines are still growing in maturity, and these two are leading the Indian market as competition increases,” he said.
SpiceJet is well-placed to carve a niche between Jet and Indigo, said a foreign airline executive who tracks the Indian aviation market closely. He didn’t want to be named.
SpiceJet “needs to capitalize on the gaps in Jet and IndiGo’s strategy. Jet is higher cost and has some elements of legacy. Indigo is following a pure LCC (low-cost carrier) volume- and scale-based strategy that leaves a lot of gaps—primarily in geographical spread within in India because of limitations of the airport runways,” this executive said. “SpiceJet with two aircraft types cannot match IndiGo’s cost. They have to compete differently, by joining an alliance, by developing a robust but outsourced loyalty programme, by developing their product, by being ahead in technology. There’s a lot they can do.”
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First Published: Mon, Mar 25 2013. 09 44 PM IST
More Topics: spicejet | AirAsia | advertising | jet airways | indigo |