Monday, 8 December 2014

Spicejet in Deep Trouble, Investor Hunting On

Spicejet airline is the low cost carrier of India which is one of the four low cost carriers operating at this time: IndiGo, GoAir and Air Asia India being the other three. As the airline sees a major hurdle in meeting its financial obligations in the wake of recurrent loses, DGCA has begun taking stock of its financial health and the resultant impact on the safety and the operational feasibility of its routes. In directives, DGCA, the civil aviation regulator of India, has made it clear that the carrier has to seek financial respite in this time of crises and shall find an investor, otherwise its operations might be curtailed and even the license might get suspended.

DGCA has also measure to ensure that public does not suffer. It has asked the airline not to book tickets in advance of more than a month. It has also directed it to refund all the money for bookings taken till the month of October 2015. It has also taken back those slots (186 in number) which have seen flight cancellations. The companies that have leased the aircraft to the company have also taken back some of their aircraft which include the Boeing 737s and Q 400s. Reduction in fleet has led to curtailing of scheduled flights, resignation of more than a 100 pilots and even the salaries of employees have not been paid. All this leads to a messy situation in which Spicejet finds itself.  It is to be noted that the carrier has dues amounting to 1600 cr. and it will be required to provide a credible payment schedule to DGCA by December mid. It has also been asked to give the salary to employees by the seventh of every month and has also been told to pay the dues of salaries by December 15.

Spicejet has been in news recently for its lowest fare price which it contented has led to market stimulation even though it was itself in turbulent weather. It has been surviving on funding provided by its owners who have infused capital to keep it afloat in past.

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