SpiceJet: Regional focus can help airline soar further

The resilient financial performance of low-cost carrier SpiceJet in the quarter to June 2012, in the face of falling passenger traffic over the past six months, is a pointer to the success of a strategy of focusing on regional routes, even in a weak operating environment.

Even after excluding the one-off income from sale and leaseback of aircraft and engine warranty claims, the Chennai-based airline has reported profits, mainly due to higher passenger traffic. Moreover, the performance follows five consecutive quarters of losses.

SpiceJet recorded a net profit of Rs 54.6 crore for the June quarter, compared with a net loss of Rs 71 crore a year ago, on the back of a 26% growth in passenger traffic.

The airline also witnessed a significant improvement in revenue per passenger, to Rs 4,068 from Rs 3,283 a year ago, which helped its net sales grow 51% to Rs 1,406 crore in Q1. Going ahead, it would be vital for SpiceJet to boost regional connectivity.