SpiceJet is a low-cost carrier (LCC) of India, popular for its offerings of cheap air tickets. Distinct from full-service carriers, it gives a chance to save money. SpiceJet offers air tickets with the option of meals, either free as part of the SpiceMax package or at a meagre fee. This LCC also offers discounted fares besides the usual low airfare. It has been popular in Indian aviation for offering discounted costs to customers on more than one occasion. Low-cost SpiceJet flight tickets have made its competitors reduce their prices as well.
Passengers have been the biggest beneficiaries of such strategies as they can save money. A report by DGCA, the Indian civil aviation regulator, showed that there was an increase in the monthly air traffic as compared to the previous years. This indicated that more people preferred to take advantage of cheap bookings. There are a lot of reasons why carriers reduce the cost of travelling with them, two of which are described below:
Lean Travel Season and Promotions
Discounts are primarily aimed at selling tickets during the lean season, doing occasional promotions as a result of competitive pressure, and launch new services. During the lean season, there is a good chance that scheduled flights do not have high passenger load factors. The term denotes the level of seat occupancy on a particular flight of a carrier. A 100 per cent load factor means that flights are fully occupied and there are no more seats left. When there is not much demand for tickets, airlines often operate at prices, which barely cover their operating costs.
Another instance for discounting is when an air service provider is promoting its in-flight services and wants people to experience them. This is usually done during the launch of any new service, flight to a new destination or to celebrate a special occasion. Airfare reduction is one of the ways to popularise such developments and attract more travellers.
Competitive pressure could also be a reason for offering low airfares. As more airlines enter the fray with their distinctive offerings, others might be compelled to follow the suit for the fear of losing passengers.
The rationale for SpiceJet behind taking such steps was that it wanted to stimulate the market. It was based on the presumption that in a price-sensitive market, such as India, less expense holds the biggest attraction for people to buy products or services. Low prices would be able to attract people, who have not travelled by air, as it had generally cost more. This helped in fulfilling the aspirations of many new air travellers, who wanted to reach their favourite holiday destinations.
At the same time, the reduced prices of SpiceJet flight tickets were also aimed to bring back passengers, who had been picking its competitor airlines. Other airlines, on more than one occasion, had to reduce their prices, following in the footsteps of SpiceJet in order to prevent frequent flyers from leaving.
These are the two main reasons, why LCC allow a flight ticket booking at discounted prices, even lower than what they normally offer.