Bad news for travelers. Although low-cost airliner SpiceJet believes its Re 1 ticket offer was not predatory or restrictive nature, it has decided to withdraw it following a severe reprimand from the Directorate General of Civil Aviation (DGCA).
Speaking to CNBC-TV18's Shereen Bhan, SL Narayan, Group CFO at the Sun Group said, "Our objective is not to pick up fights. We have accepted the position of the DGCA on the Re 1 offer. Other terms of the offer remain."
Narayan said the customers who have already bought the tickets will be allowed to avail the offer.
Terming SpiceJet's offer of rupee one fare across its domestic network as "predatory" and a "malpractice", aviation regulator DGCA today came down heavily on the no-frill carrier and asked it to stop such pricing immediately.
Hours after SpiceJet offered fares as low as rupee one valid for domestic travel till next year, the DGCA shot off a strongly-worded directive to the airline asking it to stop the three-day offer "immediately".
Such pricing was "not only predatory", but it amounted to "malpractice" under Rule 135 of the Aircraft Rules relating to air tariff, official sources said.
The fact that only one or two seats were being offered on each flight at the rate of one rupee amounted to "deceiving the travelling public", they said, adding that the airline was making such an offer for 91 sectors across the country.
Rule 135, under which the directive was issued, says, "When the Director General (of Civil Aviation) is satisfied that any air transport undertaking has established excessive or predatory tariff...or has indulged in oligopolistic practice, he may, by order, issue directions to such air transport undertaking."
Interestingly, SpiceJet is not the first carrier to come up with such an offer. One rupee tickets were earlier offered by the erstwhile Air Deccan, which was making losses and was later bought over by liquor baron Vijay Mallya's Kingfisher Airlines that has now folded up.
SpiceJet, which posted a Rs 171 crore loss in the December quarter, has been virtually leading a fare war in the aviation sector since January by making similar offers, forcing other airlines to follow suit.
Apart from the latest rupee one offer, the airline also announced two special schemes, offering the travellers Rs 799 and Rs 1499 ticket prices, excluding taxes and airport fees, with a booking window of three days, starting today. The travel period for the tickets booked under these schemes would remain valid till March 28 next year from this July.
(With inputs from PTI)
SpiceJet stock price
On April 01, 2014, SpiceJet closed at Rs 14.49, up Rs 0.34, or 2.40 percent. The 52-week high of the share was Rs 43.75 and the 52-week low was Rs 12.50.
The latest book value of the company is Rs -3.50 per share. At current value, the price-to-book value of the company was -4.14.
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