New Delhi: SpiceJet’s closure seems inevitable despite the “temporary relief” from the government for the cash-strapped airline. The airline had suffered a loss of Rs 310 crore in the second quarter of the current financial year. At least Rs1,000 crore would be required from an investor, as part of the recapitalisation process if some hope of recovery is to be found.
Sources said the government is worried on multiple counts. SpiceJet has about 5,000 employees and the government is worried that the employment of about 20,000 people could be affected both directly and indirectly if the airline winds up. Also, with the holiday season in full swing, cancellations of SpiceJet flights could create tremendous chaos, pus-hing up air-fares sharply.
The government is also worried that the aviation sector’s overall seat-capacity will also be hit badly if the airline shuts down. On whether, extended credit would be given by the oil companies to SpiceJet, ministry sources said discussions were on regarding this and a solution would be arrived at.
The civil aviation ministry brought SpiceJet’s financial plight to the notice of Prime Minister Narendra Modi. SpiceJet is currently operating about 250 flights daily and its market-share in October was about 17 per cent.
For many, the writing was on the wall after SpiceJet started cancelling flights a few weeks ago, saying this was because of “fleet restructuring”. The cancellations led the DGCA to ban advance bookings with the airline beyond one month in advance. Soon after that, SpiceJet announced cancellation of over 1,800 of its flights from December 8 to 31, cancelling 70 to 80 flights daily. The ministry sources said that the ban had hit the airline badly.
On Monday afternoon, top airline functionaries met the DGCA and explained the airline’s financial plight. Later, the airline bosses met minister of state for civil aviation Dr Mahesh Sharma and told him that the airline would be left with no option but to either close down operations immediately, or else after 30 days if no financial relief was forthcoming from the government. That’s when alarm bells began to ring in the government.
“SpiceJet representatives met me and asked for financial relief. I did not give any assurances but we are looking into the matter,” Dr Sharma told reporters, following which the SpiceJet functionaries met the civil aviation secretary and other senior officials to find a way out.
