SpiceJet Benefits from Kingfisher Woes

Thursday, 29th November 2012 at 01:33am

SpiceJet airline managed to cut its losses by 32% for the second quarter of 2012. The airline benefited from the downsizing of the rival Kingfisher Airline's capacity across its network.

The losses still shows the country's struggling aviation industry which saw a $2 billion loss the previous year. Save for IndiGo, all major Indian airlines suffered losses due to high jet fuel taxes, regulatory uncertainty and the mile-high airport fees.

According to SpiceJet CEO, Neil Mills, the aviation industry has been dragged down by high fuel costs and the weakening Indian rupee.

Kingfisher ceased flying after its license was ordered canceled last month for safety reasons. Even before the cancellations, the airline had been operating way below its capacity, allowing other airlines to raise their fares.

SpiceJet suffered a loss of 1.64 billion rupees ($30 million) for three months ending September 30, way above its own estimates of 961 million rupees. It's last year's loss for the same period was 2.4 billion rupees.

The airline's auditors revealed that its total losses were more than its net worth at September 30.

The airline did not give any comments to confirm or deny the issue regarding the matter.

The budget carrier surprisingly made a 57% operational revenue during the quarter usually considered as lean because the traditional peak season for the Indian travel market usually starts on October. Rising air fares during the quarter was also evident as shown in the 37% increase passenger yields.

Jet Airways, meanwhile, managed to narrow down its 2nd-quarter losses by 86%, beating estimates, because of the increase of its operating income.

After the Indian government has eased its foreign direct investment policy recently on domestic airlines, SpiceJet is regarded as the frontrunner for foreign airlines wanting to invest in India.

The airline has publicly revealed earlier that it has ongoing negotiations with Middle-Eastern carriers for possible partnership.

SpiceJet's shares climbed 2.68 percent higher, closing the day at 36.35 rupees per share or a gain of 50% in the past 12 months. In comparison, AirAsia's shares went down by 23.4% during the same period. AirAsia is Asia's largest low-cost airline.

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