SpiceJet eyes ancillary revenue streams

KOLKATA: Low-cost carrier SpiceJet has zeroed in on a new strategy to cut losses and achieve this year’s revenue target. The airline, which reported Rs 70 crore loss in its 10 months of operations last fiscal (June 2006 to March 2007), is eyeing ancillary sources like onboard food, courier and promotions to offset some of the losses. SpiceJet plans to collect 8% of the ambitious Rs 1,500 crore revenue target from ancillary sources this financial year.

The airline is looking to looking to bring in an additional Rs 100 per passenger though this route to support yields. Thus, from May 23rd, the carrier has started selling food on board. It is also taking courier on board, an effort that has mopped up Rs 1.5 crore in the first month of launch, said company sources.

Onboard promotions of cellular service provider Airtel and insurance company Max New York Life through a tie-up with marketing company UCP are already under way. SpiceJet is looking to rake in revenues of at least Rs 3.6 crore from on-board advertising and promotions in one year.

Company source said that of the year’s target, Rs 6 crore has already been collected from various sources.

The carrier is also looking to generate revenues from a travel insurance tie-up with Tata AIG, whereby each passenger who opts to fly on it has to pay Rs 129 as premium per flight.

The policy will cover accidental death, dismemberment, accidental medical emergency, trip cancellation, baggage loss and flight delays during travel. On a pro rata basis, 33% of the entire booking opted for this policy, company sources indicated.