India’s second largest no-frills airline, SpiceJet, requires $200 million (approximately Rs 1,200 crore) to turn operations around, according to the Centre for Asia Pacific Aviation (CAPA), an aviation advisory firm.
The need for more funds comes at a time when the airline is expected to post losses of around Rs 1,000 crore in 2013-14. The estimated net loss for the previous financial year almost equals the Rs 1,186 crore combined losses over seven years from 2006-07.
SpiceJet has launched a series of discount offers — seven flash sales in the last three months — to improve cash flows and clear vendors’ dues. The Airports Authority of India had last November threatened to put the airline on cash-and-carry for not clearing dues. However, a senior airports authority official said SpiceJet did not have any dues pending with it.
Unlike full-service airlines that give credit to agents, budget carriers collect deposits in advance from them. Discount offers induce agents to sell more tickets, thereby increasing the deposit amount and helping airlines meet immediate cash requirements. “The airline is also asking (ticket-booking) portals to increase the deposit amount,” an industry source said. SpiceJet is understood to be paying the portals Rs 150 above the commission on the ticket price.
The airline denied the industry insights available about the frequent flash sales in response to an emailed query from Business Standard.
18/04/14 Aneesh Phadnis & Sharmistha Mukherjee/Business Standard
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The need for more funds comes at a time when the airline is expected to post losses of around Rs 1,000 crore in 2013-14. The estimated net loss for the previous financial year almost equals the Rs 1,186 crore combined losses over seven years from 2006-07.
SpiceJet has launched a series of discount offers — seven flash sales in the last three months — to improve cash flows and clear vendors’ dues. The Airports Authority of India had last November threatened to put the airline on cash-and-carry for not clearing dues. However, a senior airports authority official said SpiceJet did not have any dues pending with it.
Unlike full-service airlines that give credit to agents, budget carriers collect deposits in advance from them. Discount offers induce agents to sell more tickets, thereby increasing the deposit amount and helping airlines meet immediate cash requirements. “The airline is also asking (ticket-booking) portals to increase the deposit amount,” an industry source said. SpiceJet is understood to be paying the portals Rs 150 above the commission on the ticket price.
The airline denied the industry insights available about the frequent flash sales in response to an emailed query from Business Standard.
18/04/14 Aneesh Phadnis & Sharmistha Mukherjee/Business Standard
