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SpiceJet first flight on May 23, sells over 5,000 tickets online


May 19, 2005: Low-cost airline SpiceJet will launch its commercial services on May 23 with first services scheduled on Delhi-Ahmedabad-Bombay route, to be operated by three Boeing 737-800 aircraft. The airline is all set to launch its flghts to Goa on May 27 and to Pune and Bangalore on June 13.

Spicejet, which will have only economy class, is expecting to lure travellers with air fares slightly over air-conditioned coach rates of trains in India.

The low-budget airline is also offering a debut price of Rs 99 on domestic routes for the first 99 days of operations, which are also offered at Rs 499 and Rs 799. SpiceJet, a reincarnation of erstwhile ModiLuft, plans to offer 9,000 under the introductory offer and all flights would offer between five to 10 seats daily at low prices.

Taking on competition by horns, SpiceJet has priced its fares by 55 per cent to 60 per cent lower than regular economy air fares of other airlines players in the industry, including India's largest domestic airline Jet Airways Ltd.

The airline offers a single class in all its 189-seater planes, with complementary snacks and water. Mark Winders, Chief Executive Officer of SpiceJet, said, "We see ourselves taking train traffic and putting it in air, creating a new market for seniors, students, leisure and train travellers."

However, the company is only looking at the domestic market for the moment and is presenting its services as an alternative to train journeys of more than six hours.

The airline had sold over 5,000 tickets on Tuesday, after opening online booking facilities at 0600 IST. The carrier expects to post a positive contribution and profitability after six months. "We believe there is a tremendous opportunity in the low-cost model in India. The air market is dramatically underserved here and we expect to cash in on this," he said.

The airline had made an initial investment of $25 million and currently employs around 30 pilots. The carrier is also planning to acquire 10 brand new aircraft by January 2006, and eventually increase its total number of planes to 30.

SpiceJet is also planning to issue convertible bonds in June to raise $90 million, which would be used for expansion of its aircraft fleet. However, the carrier has no intention to seek additional funding, either through debt or equity at this point, even though funding would be inevitable when the expansion plans shape up, he said.

The carrier is 20 per cent owned by foreign institutional investors and other institutions like Citibank, ABN Amro and Goldman Sachs. Royal Holdings Services Ltd, a Nevada-based company, has a major stake in SpiceJet.



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