SpiceJet's regional services will take off from July 2011

SpiceJet is happy to introduce its new regional services beginning from July this year, operating on 16 non-metro routes with Chennai, the capital city of Tamil Nadu, as one of its hubs. SpiceJet plans to have at least three bases, one each in the east, north and south regions, for its operations to smaller cities.
SpiceJet will get first of its 15 Bombardier Q400 in June and will use it to launch the latest services. By the end of this year, SpiceJet will have eight of these aircraft in its fleet with the remainder joining in 2012.

SpiceJet, is the fourth largest Indian airline with a 13.6% market share and currently operates 169 flights daily with a fleet of 29 aircraft.

"Each competitor has its own strategy. We have decided to grow organically on the domestic routes and in the regional market also, in total we will grow by 20%" Spice Jet CEO Neil Mills said.

On the regional routes spiceJet will either fly passengers between a metro and a non-metro destination or between two non-metros with lower airfares and with significantly less airport charges for non-metro airports.

SpiceJet is also expanding its narrow body aircraft fleet, with a delivery of five Boeing 737s this year and the airline will announce new routes in the coming summer schedule. The fleet expansion will be made possible by leasing more aircraft from the market.

"We have added 60 aircraft in the last four months (orders of 30 each for Boeing and regional jets). Our scheduled deliveries of new aircraft are from 2014 for the Boeing fleet. Between 2012 and that period we are looking to add five to six aircraft per year," Mr Mills said.

For its fleet expansion, the airline already  has an agreement with US Exim Bank for funding the 15 Bombardier order. It requires close to $450 million (list price) to buy these aircraft. "US Exim will pay 85% of the requirement and the rest we will fund through our cash reserves. Since the airline is doing well now, other funding options are always available," Mr Mills said.

"The low cost market space in India is definitely going to get crowded and the competition is bound to increase. It will be tougher for airlines who have not kept their costs under control and our competitors will feel the heat," Mr Mills said.