Analysis of SpiceJet’s Initial Bombardier Q400 Operation and New Hub at Hyderabad

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Low cost carrier SpiceJet over the weekend revealed its initial Bombardier Dash 8 Q400 operations, with 225 weekly flights operating on 17 distinct city pairs (see end of post for the full operation). The new flights will all commence between September 21st and October 4th. Operations will be made possible by the delivery of 5 brand-new Q400s from Bombardier by mid-September.

SpiceJet Bombadier Q400 Dash 8

SpiceJet ordered 15 Q400s with 15 purchase options back in November of 2010. The aircraft will be configured with 78 economy class seats, and used by SpiceJet to serve Tier 2 and Tier 3 cities.

As expected, the first 5 aircraft will be primarily used to create a hub at Hyderabad’s Rajiv Gandhi International Airport. 13 of the 17 initial city pairs to be served by the Q400 are from Hyderabad, and 11 represent entirely new city pairs for Hyderabad. RGIA will see almost 14 new flights per day from SpiceJet, which currently operates 18 flights per day at the airport; bringing the total hub to 32 flights.

The second hub for SpiceJet is still planned to be Bangalore, however, as this blog opined in March, many feel that Bangalore would have been a better first hub than Hyderabad. While Hyderabad is admittedly less competitive than Bangalore, the Bangalore market is more than 1 and a half times the size of the Hyderabad market (11.24 million passengers vs. 7.4 million passengers). Furthermore, many of the Tier 2 routes planned in Hyderabad face competition from some combination of Jet Airways and Kingfisher, not that different from the situation on Tier 2 routes in Bangalore. These carriers are using their position as the sole provider(s) of such routes to charge passengers in Bangalore extremely high fares.

Hyderabad is a more diverse (in terms of routes served) base for Jet Airways than for Kingfisher. The situation is reversed in Bangalore. Kingfisher is in dire financial straits, and its service reputation has been slipping. This gives SpiceJet a chance to come into the Bangalore market and steal away many passengers with low fares. But by late 2011/early 2012, it is possible that Kingfisher will have been injected with capital (perhaps from its new OneWorld partners?), and/or re-structured- which would allow it to compete far more vigorously with SpiceJet. In Hyderabad, SpiceJet will have to contend with a still competitive and fiscally sound Jet Airways, not the most appetizing of battles.

Regardless of the choice of the Hyderabad hub over Bangalore, SpiceJet has managed to build both a very strong Q400 operation, and a well designed hub in Hyderabad. The exact operation of the Q400s can be found at the end of the post, and the full hub operation in Hyderabad is shown below.

Origin	Destination	Time
Pune		0015
	Mumbai	0550
	Nagpur	0625
	Tirupati	0640
	Delhi	0645
Mumbai		0650
	Bangalore	0655
	Vijaywada	0710
	Visakhapatnam	0720
Ahmedabad		0805
Delhi		0810
	Chennai	0835
	Coimbatore	0840
Chennai		0845
Nagpur		0915
Vijaywada		0915
	Ahmedabad	0915
Tirupati		0940
Delhi		0950
	Vizag	0955
	Rajahmundry	1000
Visakhapatnam		1005
	Cochin	1020
	Delhi	1035
Bangalore		1110
	Kolkata	1140
Coimbatore		1150
	Delhi	1220
Vizag		1225
Rajahmundry		1230
	Goa	1230
	Mangalore	1300
Vizag		1315
Cochin		1400
Tirupati		1420
	Delhi	1435
	Tirupati	1500
	Aurangabad	1540
Goa		1550
	Vijaywada	1610
Mangalore		1640
Ahmedabad		1650
	Vizag	1655
	Bhopal	1700
	Indore	1700
Delhi		1710
	Chennai	1720
Delhi		1730
	Coimbatore	1740
	Visakhapatnam	1800
Vijaywada		1820
Aurangabad		1835
	Madurai	1840
Kolkata		1945
	Bangalore	2015
Visakhapatnam		2045
Coimbatore		2050
	Pune	2055
	Delhi	2120
	Mumbai	2130
Delhi		2150
Bhopal		2205
Indore		2205
Bangalore		2220
Mumbai		2240
Madurai		2300

The first column represents the origin for arrivals in Hyderabad; the second column represents the destination for departures from Hyderabad. The time column varies between arrivals and departures, depending on which one is blank.

As is shown above, SpiceJet has built a very strong operation in Hyderabad. The new destinations served by the Q400 are a mix of Andhra and other Southern points, as well as major Tier 2 industrial cities in the North with strong business demand.

The hub is structured as a rolling, or de-peaked hub; with flight arriving and departing throughout the day. This contrasts with banked hubs, where flights are bunched together in “banks”, creating peaks and troughs in terms of operations at various points throughout the day.

The usage of a rolling hub allows SpiceJet to maximize aircraft utilization, because there is no necessity to keep aircraft on the ground to build towards a flight bank. While this approach can hurt the connection potential, Hyderabad’s central location allows it to offset longer wait times at the hub with shorter flight times; keeping the overall connection potential in parity with SpiceJet’s other operations in Mumbai and/or Bangalore.

And while connections may be hurt somewhat by the rolling nature of the hub, SpiceJet has smartly maximized its connectivity in Hyderabad through good scheduling. Certain early-morning departures have no flights to feed into them, while late-night arrivals often do not connect to any flights till the morning. However, SpiceJet has wisely scheduled many of its more connection-dependent departures and arrivals during the daytime, when connections are possible. Departures in the early morning or late night time-frame are mostly limited to major Southern points (such as Tirupathi) with strong origin and destination (O&D demand), or major Indian cities (e.g. Delhi, Mumbai, etc.).

While Hyderabad is the primary base of Q400 operations, there are a couple of tag-on flights operated (Indore-Bhopal, Tirupathi-Vizag). Additionally, Bangalore does get one daily flight to Vizag, which is facilitated by a flight between Hyderabad and Bangalore. This is smart, as it allows the carrier to build up a support infrastructure for the Q400 in Bangalore, well before hub operations start there.

The Q400 operation is designed quite optimally. The majority of slack in the schedule occurs on Tuesdays, which are traditionally periods of weak demand. By not scheduling as many flights on Tuesday, SpiceJet can use that time to perform maintenance on the aircraft, without affecting operations. However, the one issue with SpiceJet’s Q400 schedule is that it regularly calls for aircraft turn-around times of 15-20 minutes. While that is (barely) doable at secondary airports such as Madurai and Tirupathi, , such turn times are un-realistic at major airports like Bangalore and Hyderabad, where bottlenecks are common. This could end up hurting the on-time performance of SpiceJet as a whole, as one delayed flight causes multiple additional delays in such a small operation.

Their choice of hub notwithstanding, SpiceJet has built a very smart Q400 operation and a strong new hub in Hyderabad, which becomes their second major connecting complex after the home-base at Delhi. The Q400 is one of the most efficient and passenger friendly regional aircraft available, and it should serve SpiceJet with distinction.

What are your thoughts on the new Hyderabad hub or the Q400 operation? Let us know in the comments below.

-Vinay Bhaskara
Twitter: @TheABVinay