SpiceJet says it plans to revolutionise long- haul air travel in India.
Fighting bankruptcy only two years earlier, it plans a direct Delhi-London flight at a to-and-fro fare of Rs 30,000. The current rate for this is around Rs 45,000 and could be more during the peak season.
At its Gurgaon-based headquarters, planning is on for possible permutations and combinations. If all falls into place, the airline looks to start the route early next year.
“We feel there is huge demand for this. As the country becomes richer, personal incomes increase and people want to travel, provided fares are affordable. Imagine the demand a fare of Rs 15,000 on the Delhi-London route will have,” said Ajay Singh, chairman and managing director.
The airline says it is working to bring down the cost of operation, to enable low-ticket prices. It is thinking of a single class all-economy cabin, with less leg space. And, separately pricing each additional service like meals, on-board Wi-Fi, seat selection, priority boarding and privileged check-in.
Providing an all-economy configuration in a Boeing 787-8 Dreamliner will allow SpiceJet to increase the number of seats to around 350, as compared to 256 seats of Air India with a two-class cabin. Instead of the usual choice of operating to and from Heathrow, the idea is to do so from Gatwick, another airport serving London but where the charges are lower.
“An airline has to make money while keeping fares low. We are looking at a bunch of steps through which we can bring down the cost of operating a seat while maximising the revenue. The common model includes food, beverage and Wi-Fi. Can we unbundle that and ask the passenger to pay for services?
I feel people will want to see it — you decide what you want to buy and pay for that,” Singh says.
Sources say SpiceJet has sounded off lessors for a Boeing 787-8 Dreamliner.
A wet lease is an arrangement in which the lessor provides an aircraft, along with the cockpit and cabin crew, and pays for its maintenance and insurance. The company which wet leases the plane pays by the hours it is operated. SpiceJet has the option of converting 50 aircraft of their recent mega order into widebody aircraft and “we will exercise that in due time”, Singh says.
Globally, long-haul operations for low-cost airlines (LCCs) like SpiceJet are still at a nascent stage but expanding fast. This summer, there will be about 160 long-haul routes operated by 16 such airlines.
In March, International Airlines Group, owner of British Airways, launched Level, a low-cost brand. Lufthansa is expanding its low-cost subsidiary, Eurowings, to new destinations.
Air France-KLM is launching an LCC called Boost. In Asia, the Tony Fernades-led AirAsia has implemented a long-haul LCC model through AirAsia X.
Experts, though, sound sceptical about SpiceJet’s plan. “Half the potential unit-cost advantage for long-haul LCCs is from a higher seat count, enabled by eliminating the premium cabins and making the economy seating denser. But, you cannot reduce cost of components like fuel. On long-haul flights, fuel’s share of direct operating costs grows from 30 to 50 per cent,” says an executive of a full-service carrier.
A senior Air India official says legacy carriers can bring down the cost of economy seats by charging higher for the premium ones. “Premium traffic might account for only 10-20 per cent of passengers. Yet, it can represent up to 50 per cent of revenues in long haul,” he says.
Singh is optimistic and says one cannot remain stuck to a tried and tested model. “I think the time has come to think out-of-the-box. People always said that a single model fleet is the ideal option. We have shown it is possible to make profit with smaller planes on regional routes; now, others are following us,” he says.