Masterstroke? SpiceJet signs deal to sell tickets to waitlisted railway travellers

New Delhi: Has SpiceJet clinched a winner in its tie-up with IRCTC to sell unsold tickets to train travellers? The low cost carrier has seen sharp swings in its fortunes since December last year, from briefly shutting down operations in that month to reporting the first profitable quarter in seven straight quarters in January-March. If this IRCTC tie-up works, it could generate significant passenger volumes for SpiceJet.

IRCTC's public relations officer Sandip Dutta explained to Firstpost that the Railways have entered the tie-up with SpiceJet and Go Air. It enables a train traveller whose ticket is wait-listed to cancel the train ticket and instead get on to a flight of either airline by paying some incremental fee.

 Masterstroke? SpiceJet signs deal to sell tickets to waitlisted railway travellers

Reuters image

"We entered into this tie-up a month ago and all tickets passed on by SpiceJet and GoAir during the month have been sold to wait-listed travelers," Dutta said.

There are some riders of course. This scheme only applies to tickets booked at least three days prior to the date of the journey, these train tickets can only be cancelled on a specific website and flight tickets are available only for the day of the train journey or a day prior to it.

There are no fixed sectors to which the scheme applies, no fixed number of tickets either airline must make available to IRCTC and no fixed rates. The incremental payment for a flight (over and above the train fare) depends on the sector and prevailing prices.

Dutta said IRCTC was in the process of tying up with other private airlines too for similar deals so whether SpiceJet will retain any significant edge in the end remains to be seen.

This helps both the railways and SpiceJet - long wait lists of train travellers gets reduced and they get to fly with SpiceJet for a small incremental fee instead. It is not clear if SpiceJet will have to pay a commission to IRCTC or vice versa.

SpiceJet promoter Ajay Singh pointed out that this tie-up is promising for the airline and he expects "significant" passenger volumes to be generated through this scheme.

Of course, Singh is not banking solely on the IRCTC tieup to improve things at the airline. In an exclusive chat with Firstpost, he mentioned several other initiatives:

1) Fleet expansion by October: As of now, operational fleet of 20 Boeing 737 aircraft and 15 Q400s. No plans to phase out Q400s as of now, may add 6-7 aircraft by October. Claims all issues with aircraft lessors resolved

2) Headcount: Already down significantly, from 5200 when he took charge of the airline to 3800. Keeping headcount down and simultaneously re-negotiating supplier contracts has helped in significant cost reduction for SpiceJet

3) Shrinking operations: When Singh took charge of the airline in January, it was flying to 39 overseas and domestic stations. That number now stands at 31 and may reduce further. Singh reiterated that the low cost model requires an airline to add frequencies to existing stations instead of adding new stations. Stations which have been shut down are either in close proximity to existing ones or those where flight frequency was already low.

4) Investment: In the revival plan for SpiceJet which Singh had submitted to the Ministry of Civil Aviation in January, he had committed Rs 1500 crore in investment. Of this, a little over half the amount or Rs 800 crore has come in till now. Singh said there was no need to immediately bring in the remaining amount as instead of funding SpiceJet's losses, he would rather fund its expansion. But there's still no clear roadmap on when and if the remaining Rs 700 crore will come in.

5) New logo: SpiceJet has a new logo and slogan ‘SpiceJet is different. It is Red. Hot. Spicy.’ The airline has also unveiled a mobile app for Android and Apple iOS smartphones. The app allows customers to book tickets, get real-time flight status, manage their bookings (change, cancel, refund), add optional products such as meals, SpiceMAX and advance seat selection.

6) Strategic investors: Singh said a lot of people, including Private Equity investors and foreign airlines, are interested in funding the airline.

Singh said he was hopeful of FY16 being a profitable year but that there was still a long way to go.

Updated Date: Jun 08, 2015 15:35:17 IST