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Despite crisis, SpiceJet filled up 87% of planes it flew

However, if that was done at the cost of diluting yields, it could punch a bigger hole in its finances

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Not all is wrong at budget carrier SpiceJet Ltd. The November air passenger traffic numbers put out by Directorate General of Civil Aviation (DGCA) shows that the troubled airline's load factor has shot by up to 86.9% in the month compared with the 80.1% in October.

If this statistic is taken on a standalone basis, then the finances of the no-frill airline could be on the mend because, in the last fiscal (FY14), its inability to operate at or above the breakeven load factor of 80% was one of the reasons its losses had expanded. Last fiscal, SpiceJet's losses widened to Rs 1,000 crore as against Rs 189 crore in FY13.

However, when calculating the profit or loss of an airline, several other elements besides load factor is considered. If the rise in the load factor has come by diluting yields – revenue per seat kilometre – then the airline would not have gained much from it.

"It has to be seen whether they were flying below load factor or above it. When an airline keeps flying more despite not achieving its breakeven load factor, then it is like trying to fill water in a leaking pot. You have to rationalise your operation to plug the hole in the pot," said Bangalore-based airline consultant Pankaj Pandit.

Predictably, SpiceJet's market share slipped to 14.9% in November from 17.3% in the previous month, pushing it down to the fourth place in the domestic market behind Jet Airways, Air India and IndiGo. Interestingly, SpiceJet had been overtaken by Air India in October, when its share had shrunk from 18.6% to 17.3%.

And what has been SpiceJet's loss in domestic market is IndiGo's and Jet's gain. IndiGo retained its leadership by cornering a higher share at 33.5% last month, up from 31.9%. GoAir also increased its market share to 9% from 8.5%.

Overall, the domestic airlines carried 51.03 lakh or 9.14% more flyers in November at 609.43 lakh compared with 558.40 lakh in October. On a month-on-month basis, air traffic passenger grew 14.35% to 58.74 lakh from 51.37 lakh.

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