The Hindu Business Line : SpiceJet to connect more cities

Augmenting its operations from Ahmedabad, low-cost airline SpiceJet Ltd today announced new flights to Goa and Chennai from October 25, with an additional flight to Mumbai, and unveiled its plans to connect Ahmedabad to Jaipur, Kolkata, Pune and Hyderabad by December this year with the induction of more aircraft to the fleet.

Announcing the consolidation-cum-expansion plans, the SpiceJet Chairman, Mr Siddhanta Sharma, said here the airline recently added two new-generation Boeing 737-800 aircraft to its existing fleet of six aircraft, making it one of the fastest growing airlines in the country.

The airline, with a turnover of Rs 438 crore in 2005-06 is targeting to increase it to Rs 1,000 crore by the end of the current fiscal. The company is also in the process of deciding the mode to raise $50 million - $60 million for its expansion plans following a recommendation by JM Morgan-Stanley of the UK, he told Business Line.

New destinations

Earlier, he told a press conference that the company, which commenced its operations in India from Ahmedabad in May 2005 through its first flight to Delhi, seeks to start the new flight destinations of Ahmedabad-Goa-Ahmedabad and Ahmedabad-Chennai-Ahmedabad with special fares of Rs 2,499 and Rs 1,499, respectively.

SpiceJet currently connects 13 cities in India with the total number of its daily flights being 52 and the passenger seat capacity 9,639 per day. He said SpiceJet intends to add five more aircraft by the end of 2006 and about 20 aircraft in the next three years.

It seeks to increase its passenger market share from the existing seven per cent to 10 per cent by the end of the financial year 2006-07.

Royal Holdings Services Ltd, a Nevada (USA)-based company, has a major stake in SpiceJet Ltd, with institutions such as Citibank, CLSA, Morgan-Stanley, Istithmar and others holding over 17 per cent. The company's losses in the first year to the tune of Rs 43 crore last year was mainly (Rs 33 crore) due to its decision not to pass on fuel surcharge at the rate of Rs 750 per ticket to the passenger. Slowly, this surcharge is now being passed on to the traveller but profitability could come when the fuel prices get settled around Rs 35,000 per kilo-litre (KL) from the current volatility that has seen it rising to Rs 41,000 per KL to fall now to Rs 29,000 per KL in recent past.

SpiceJet hoped to break-even in the second year of its second year, 2006-07.