GoAir and SpiceJet Enter Informal Agreement to Combine Low-Load Flights

In a first-of-its-kind agreement during the pandemic, low-cost rivals GoAir and SpiceJet have agreed to an informal flight combination pact. The agreement will see the two airlines cancel flights with low loads and redirect passengers onto each other’s alternate flights. So how do such agreements work? Let’s find out more.

SpiceJet and GoAir were the two airlines that successfully lobbied the government to reduce capacity to 50% due to the second wave. Photo: Getty Images

Merge

According to Hindu BusinessLine, GoAir (recently renamed Go First) and SpiceJet have informally agreed to a flight combination agreement. With demand low across domestic sectors, the two struggling carriers have seen a chance to cut costs dramatically and boost load factors in the short run.

Effectively, the agreement allows either SpiceJet or GoAir to cancel their flight to the same destination due to a light passenger load and move passengers to the other airline’s flight. In turn, the carrier flying will charge the other the government-set price for the route. This allows SpiceJet and GoAir to save thousands in fuel costs, crew charges, landing and takeoff fees, and much more.

SpiceJet has been struggling during the second wave and is looking to cut costs deeply. Photo: Boeing

This agreement seems to have come into effect at the end of April, as India’s second wave reached its worst point. The carriers claim to have cut costs by 70% through this pact and benefitted 20,000 passengers. Moreover, the pact has also reduced both airline’s daily cash burn by nearly 10% (down ₹20 lacks), a sizeable difference.

IROPs

One SpiceJet spokesperson confirmed that the airline has an IROPs (Interline Considerations on Irregular Operations) agreement with other Indian airlines. This largely confirms the news of the Go First-SpiceJet agreement that is in effect. However, this isn’t a standard IROPs agreement between airlines.

IROPs are usually created to tackle extenuating or unforeseen circumstances, like weather delays, aircraft issues, or other major disruptions. An airline can then rebook onto another’s flights, ensuring passengers aren’t heavily delayed. However, the SpiceJet-Go First IROP is solely to cut costs.

While Go First is pushing ahead with its IPO, the second wave has meant deeper losses for the airline. Photo: Getty Images

According to sources, the system works fairly simply. One day before departure, Go First and SpiceJet will decide if either will cancel their flight due to light passenger loads. If one decides to cancel, the other carrier will reduce those seats from its own inventory. The canceling airline also has to pay the flying airline the band price of the ticket, which is currently fixed by the government.

For example, SpiceJet has canceled one of its Mumbai-Ahemdabad flights since only 75 passengers were booked. These passengers flew on Go First’s service on the same day instead and did not have to make any changes themselves. Since BOM-AMD is under 250 kilometers, SpiceJet paid Go First the government price-fixed rate.

Is it good for passengers?

In reality, this move is best for the two airlines, which are saving thousands in operational costs. Passengers will also reach their destination but could be anywhere from a few minutes to a few hours late depending on times. However, this is still better than a canceled flight. As airlines become desperate to survive this crisis, passengers will have to struggle with conveniences.

What do you think about Go First and SpiceJet’s combination agreement? Let us know in the comments!

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