SpiceJet says it may shut operations if financial relief not extended

New Delhi: The endgame seems to have begun for SpiceJet. The government on Monday evening decided to give “temporary relief” to the cash-strapped low-cost carrier, allowing it “some more time” — possibly a week to 10 days more — as far as immediate recovery of dues is concerned.

This decision came after the airline told the civil aviation ministry it could fold up Monday itself unless it gets financial relief from the government, perhaps in the form of extended credit from state-owned oil firms and state-run Airports Authority of India.

Top civil aviation ministry sources said SpiceJet’s dues are around Rs 2,000 crore, and the immediate dues it needs to pay run to around Rs 1,400 crore. A senior SpiceJet executive said the airline will continue to operate its flight schedule.

The airline was asked by the government to submit a clear funding plan, and SpiceJet promoter Kalanidhi Maran could give some financial guarantees. Ironically, on Monday, as SpiceJet appeared in danger of folding up, another airline looked set to soar with Vistara, the Tata-Singapore Airlines joint venture, granted the flying permit by aviation regulator DGCA.

“Yes, some more time has been given to SpiceJet on the issue of recovery of dues,” ministry sources said after fears that SpiceJet, that started operations in 2005, could be the second airline in two years — after Kingfisher in October 2012 — to cease operations.

But SpiceJet’s claim earlier in the day that it could fold up overnight sent the government into a tizzy, sparking fears that passengers could be in for unprecedented chaos. Questions are being asked on whether the “temporary relief” can stave off SpiceJet’s closure.