Here’s how IndiGo and SpiceJet are dealing with the crisis differently

BCCL
  • The Indian low-cost carriers IndiGo and SpiceJet are approaching different ways to make revenue in these hard times.
  • IndiGo recently launched “flex pay” for its passengers wherein they can avail the flexible payment option.
  • SpiceJet is India’s biggest air cargo operator and is targeting to increase its market share in the cargo segment.
Aviation is among the worst-affected sectors amidst the Covid-19 crisis. While IndiGo is using this time to gain more market share among passengers, SpiceJet is looking to strengthen its position as cargo transporter.

The number of passengers taking flights daily has doubled from the levels seen at the end of May but there is still a long way to go before airlines are financially comfortable.

This is the estimated loss for the period of April to June 2020.

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AirlineApr-June 2020
Interglobe Aviation₹3.2 crore
SpiceJet₹1.06 crore
Source: Prabhudas Lilladher

BI India

IndiGo offers discount and flex pay scheme to lure customers

IndiGo recently launched “flex pay” for its passengers wherein they can avail the flexible payment option. The scheme allows the passengers to secure their bookings by paying only 10% of the total fare amount and defer the rest of the payment to the airline for a period of up to 15 days either from the date of bookings or before the date of departure.

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Bhavin Shah, fund manager at Sameeksha Capital, told Business Insider that this scheme will attract more customers for IndiGo. “The whole ticketing business works on negative working capital, where customers pay earlier than booking tickets. Now that IndiGo has started this scheme, it will attract more customers, and other airlines won’t be able to match it, so it will hurt their businesses. And, even if they try to offer the same scheme, they don’t get enough cash upfront,” he said.

IndiGo also said it will give a 25% discount on the airfare to doctors and nurses till the end of 2020 as they are at the forefront of the battle against the coronavirus pandemic.

SpiceJet is not interested in competing with IndiGo’s flexpay. “Customer’s preference to book a particular airline/flight is not just dependent on flexibility to pay but on factors like suitable departure time, reasonable fares, loyalty benefits, booking and flying experience and variety of instant discount/ cash back offers running at any given point of time,” the spokesperson told Business Insider.

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SpiceJet wants to focus on making money from cargo

While SpiceJet is India’s biggest air cargo operator and is targeting to increase its market share in the cargo segment. The airline has a dedicated fleet of eight dedicated freighters – five Boeing 737s and three Q400s, and it operated close to 2925 cargo flights since the lockdown began and carried around 20,600 tons of cargo.

Elara Securities said the partial resumption of domestic operations and rising cargo movement are key positives during first-quarter for SpiceJet.


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SpiceJet also told Business Insider that It has received permission to conduct drone trials. “Post trials and approvals, SpiceXpress, the dedicated cargo arm of SpiceJet, plans to use drones to provide for a quicker, faster and cost-effective delivery of medical, pharma and essential supplies and e-commerce products.”

Earlier in a webinar SpiceJet chairman and managing director, Ajay Singh said that India has a minuscule share of traffic into the US and Europe in terms of cargo, which was under 5%. More than 95% is carried by foreign carriers, “it is just completely wrong,” he said.


Chairman Singh also asked the civil aviation minister, Hardeep Singh Puri, who was the part of the webinar to strengthen aviation policies like other countries. “Even a country like Ethiopia, where we have 28 movements between the two countries, the share of India in those is zero. Ethiopia carries all the 28 flights. (The reason is) we have had very liberal policies compared to countries like China and the Middle East,” Singh said.
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