No threat of overcapacity if overhead cost remains in control: SpiceJet


SpiceJet on Wednesday sounded a note of optimism saying that Indian airlines will soon start making money due to fall in crude prices and a stronger rupee. The airline, which registered a loss of Rs 3.89 billion in the July-September period against a profit of Rs 1.05 billion last year, said that the aviation market won’t have an overcapacity problem as long as overhead cost remains in control.

“I don’t know why we keep saying there is overcapacity. If we go back to last two or three years, there was a capacity addition of around 16-17 per cent and demand increased by more than 20 per cent, the airlines made money – which means the capacity got absorbed. Overcapacity is an outcome of the ticket price and input cost. As long as costs are in control, capacity will get absorbed.

That’s not an issue”, said Kiran Koteshwar, Chief Financial Officer, when asked if there was a need to rationalise the capacity. The airline will induct 26 aircraft by the end of this financial year which includes 18 Boeing 737 Max and eight 90-seater Q400. Read More

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