SpiceJet has denied the Director General of Civil Aviation’s reported statement that its scheme of offering air tickets, effectively for as low as Rs 400 each, was ‘predatory’.
Predatory means acts that are meant solely to destroy competition, and not for own business benefits or for the benefit of the consumer. However, SpiceJet said the scheme was a legitimate part of its business strategy and low cost carriers across the world have used such schemes. The full text of SpiceJet’s statement is given below –
We are in receipt of the letter from the DGCA regarding the ongoing fare sale, and we have already responded to it. In view of the various media and TV reports on this issue, we would like to state that –
In all of our advertisements for this sale, we clearly state that fares were starting at Re 1/- (inclusive of fuel surcharge), and that seats were limited like any other previous offers. We have sold many thousand seats at that price to passengers who booked early, we took care to ensure that fare was available on all direct routes especially on traditionally lower load factor day.
While we planned for high response, our web site was at times unable to cope with the high traffic that was generated due to the high booking activity that was taking place simultaneously as customers took advantage of the market-stimulation fares.
We do not believe the our pricing was predatory in nature since it is with the intent to stimulate demand, and is not intended to reduce or eliminate competition; with a market share of 20%, we are not in a position to be predatory.
Airlines such as Air Asia and Tiger Airways have had numerous fare sales, including in the recent past, including for their flights originating in India where the base fare was Rs 0/- (excluding fees and taxes, but including fuel surcharge).
In the past domestic airlines in India have also come up with similar offers where they charged Re 1/- fares.
This kind of low fare market stimulation and inventory management (if done properly) is essential for the low cost carrier business model, and is a key part of the strategy for low-cost airlines such as Air Asia, RyanAir, Southwest, EasyJet, etc globally, and benefits the wider travel industry and economy at large due to the stimulation and “economic multiplier” effect
As a low cost airline in a market where demand is currently soft in a market where costs are structurally high, amongst the highest in the world, we are trying our best to be innovative and adopting best practices from global low cost carriers in order to attract more customers and improve our revenue performance.