SpiceJet to set up subsidiary feeder airline, start international flights by 2010

SpiceJet, the low-fare airline based in New Delhi, India, is planning to establish a subsidiary feeder airline in order to provide regional air connectivity in the domestic market. 

The carrier will also start international flights from India by May 2010, but said it is not going for markets in the United States and the United Kingdom. SpiceJet’s planned international destinations are likely to include Asian countries like Thailand, Myanmar, Nepal and Sri Lanka as well as nations in South-east Asia and the Persian Gulf region.  

Sanjay Aggarwal, chief executive officer of SpiceJet, told reporters that the proposed subsidiary airline – which was intended to consolidate market share – would operate as a feeder airline that connects India’s smaller cities and towns to the major cities to which SpiceJet flies at present.  

The fleet of SpiceJet currently comprises 19 Boeing 737-800 and Boeing 737-900 ER aircraft. The company’s CEO said it planned to buy five more aircraft by 2011 and would hire nearly 60 pilots in the next one year as a part of its expansion plans.  

The media quoted Sanjay Aggarwal as saying that SpiceJet was evaluating all options to enhance its presence in the aviation sector and that a feeder service was one of the options. The airline was now in the process of evaluating markets to which it would like to operate services. 

SpiceJet, according to its CEO, would follow the same low-fare model for the international routes that are planned. 

The airline would use smaller aircraft for the regional operations and bigger aircraft such as Boeing 737-800 and Boeing 737-900 ER for long-haul flights and the international operations.  

Answering journalists’ questions, Aggarwal denied allegations of “cartelisation” within India’s airline industry for fixing airfares and explained that the fares were decided by competition and market conditions. SpiceJet, he added, had raised fares few days ago and it would not resort to another fare hike in the near future.  

Aggarwal said he expected the price of aviation turbine fuel to go up by 25% in the next six months but added that, at the current fare, SpiceJet hoped to break even in the next one year. 

Meanwhile, SpiceJet – which began service in May 2005 and became India’s second largest budget airline in terms of market share by 2008 – said in a press release that the carrier would not raise salaries of its top management in the next fiscal as a part of its steps to deal with the tough times in the aviation sector. 

The company said that, at present, it employs a total of 2,300 people. It, however, did not reveal the number of employees who would be affected by the decision to freeze salary.