From Kabul to Guangzhou, SpiceJet to fly in search of more dollars

The company which posted Rs 191 crore loss in FY 2013 has followed an off beat strategy with respect to its foreign routes

SpiceJet is expanding international operations to improve dollar earnings and offset losses caused by currency rate fluctuations. The company, which posted a Rs 191-crore  loss  in FY13, has started services to Kabul and Guangzhou, a first for an Indian private airline.

Over the next few months, the airline will be launch flights to Bangkok, Dubai, Sharjah, Dammam (Saudi Arabia) and Riyadh.  Bangkok, to be added to SpiceJet’s network in October, will be its 10th foreign destination. International operations accounted for 11 per cent of the revenue. Revenue in dollar terms grew thrice in the past financial year but the gap between foreign exchange earnings and expense is wide. In FY13 SpiceJet’s dollar earning rose to Rs 179 crore from Rs 59 crore in the previous year; simultaneously, the dollar expense also rose to Rs 1,511 crore in the past financial year against Rs 1,130 crore in the previous year.

The airline hopes to narrow this gap by launching flights on new foreign routes. “We are adding seven Boeing 737s in this financial year. Three of them have already been inducted. We propose to use them on both domestic and international routes. During the day planes will be flown on the routes domestic and at night on the international ones. The  unit cost on international routes is lower and it will help us improve our foreign exchange revenue,'' said company source.

The airline hopes to grow its share of international revenue to 20 per cent by end of the current financial year. The airline has a fleet of 56 planes, including 41 Boeing 737s and 15 Bombardier Q400 turboprops. Last year, SpiceJet launched new routes such as Delhi-Guangzhou, Ahmedabad-Dubai and Varanasi-Sharjah. It is the only Indian carrier to fly on these routes. It plans to launch flights on the Lucknow-Riyadh, Kochi-Dammam and  Madurai-Dubai routes.

The airline narrowed its loss in FY13 from Rs 605 crore in the previous year. In its annual report for FY13, auditors S R Batliboi and Associates said: “The company's operating results have been materially affected due to various factors and as on March 31, the accumulated losses have fully eroded the net worth of the company.”

The airline did not respond to queries on the issue but sources said net worth, though in negative, had improved over the last few months. The airline has been looking to raise funds for months and has been in talks with private equity investors and Gulf airlines for a stake sale but the talks have not lead to a deal.