The main objective of giving 75 percent discount on fares over the next three days is to improve the load factor because only at certain load factor the airlines make money, and if they don’t reach the threshold then that invariably results in losses said SL Narayanan, Group CFO, Sun Group.
SpiceJet announced that they are cutting fares by 75 percent in base fares for bookings made during February 24-26 to fill in seats during the lean season. Part of the “Super Summer Sale”, this offer is valid for travel between April 1 and June 30, 2014.
“The offer is only for a limited window that targets people whose decisions are primarily driven by prices.”
When asked if similar steps were taken by other airlines would then reduce everyone’s profitability, he said:” I don’t think so, because there is certain element of demand which is completely price led and which is dormant. It comes into reality once the motivation is there in terms of price and that is precisely what we are seeking at this time”
He further said this is not a sale which cuts across the board and is basically driven by market intelligence.
Answering a query if this discount was for some specific routes, he said “More important than routes, it is the flights”. There are certain flights which go full anyways for eg the Chennai-Delhi sector consistently logs 80% plus fliers but there are certain flights on certain sectors, at certain time of the day which don’t fill to the optimum capacity. The objective of this offer is to direct people to those flights, so at network we optimize our capacity and make better margins.”
For the complete interview watch the accompanying video
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