Below is a verbatim transcript of the interview on CNBC-TV18
Q: In the quarter gone by SpiceJet had record losses. What led to that and what would be the outlook for second half?
A: The September quarter is something that was absolutely exceptional, because we had the impact of low occupancy ratios because of the lean season and then some of the discounting that had been put in place at the start of the financial year by the entire industry that really made a huge impact and to line up our cup of woes was the runaway increase in the value of US dollar. So it was a perfect storm in many ways and that is the reason why we had to post some incredibly large losses.
The good news is because of those impacts we have done some price corrections. On an average we have taken prices up by about 40 percent. So some of the losses that we were incurring in some routes have been salvaged, so we should post much better numbers this quarter, which thankfully, is also a better quarter in terms of loads. We are looking to an improved performance in this quarter.
Q: Another thing that impacted you all in the quarter gone by was very high maintenance charges. Incrementally it was about Rs 78 crore of maintenance charges. Is that something that will continue even in Q3 or Q4 or it is going to come down much lower, if yes any levels that you could tell us?
A: I think the maintenance charges is something that cannot be predicted, because sometimes what happens is an engine goes for maintenance within short period of time because of higher wear and tear. There are too many factors that impact on it and since that number is something that we cannot predict, we could have some lumpiness in this. But I do not expect similar kinds of charges to come through in the coming quarters.
Q: Have the load factors increased or have they been around the same mark as Q2? Q2 is seasonally week; but in Q3 have you seen improvement in that?
A: It is definitely looking better. Prices are also better. This is something which is peculiar to the industry because typically in December everybody travels and a lot of people come into India. So our realisations get better and the loads get better. September is a time when not many people are travelling, so this is the nature of the beast I guess.
Q: You also said on the back of the sharp price increases that the airline has taken some of your previously loss making routes will now become profitable. Could you tell us which would be those routes? What is the extent of the earlier loss making which will now be profitable?
A: That is going to be a tough one because we will not be able to disclose route-wise profitability. Getting into specific data on route-wise numbers will be difficult, but it is suffice to say that we take a long hard look on every destination. Today, the mantra in the airline industry is to look at route profitability and we are adding more frequencies and sectors where we are doing well and that is going to be the focus going forward.
Q: I was just looking at some of the fares on some of the profitable routes like Mumbai-Delhi and what really struck me was that all of the supposed low-cost airlines SpiceJet, Indigo, GoAir, JetKonnect have same fare to the last decimal. Is there a bit of a cartel which is operating as far as these routes are concerned?
A: We live in a very, very competitive market and India being such a value-for-money market there is hardly any room for any kind of differentiation. Prices get matched immediately and it is not fair to say that the industry is cartelising.
Q: What kind of impact do you see on pricing now that we will have two more players coming in, the Tata SQ and AirAsia going forward? Do you see any kind of pressure going forward on some of these fares?
A: Absolutely. Two more players and two very, very powerful players coming into the industry is bad news for pricing, but great news for customers. It is not like this industry is in any state of high profitability. Already it is almost a hand-to-mouth existence and getting two more extremely well capitalised powerful players in the industry is going to be bad news for existing players. But I think we have to strategise, we need to pull up our socks, we need to execute well.
I do see that this industry will be in for some really tough times ahead.
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