SpiceJet Troubles Mount: 10 Points On “Enhanced Surveillance”, Unpaid Dues And Crew On Furlough
India’s low-cost airline SpiceJet is facing increasing challenges after the Directorate General of Civil Aviation (DGCA) placed it under enhanced surveillance following a special audit of its engineering facilities. This scrutiny comes in light of recent reports highlighting the airline’s financial struggles, flight cancellations, and operational difficulties. The DGCA’s intervention aims to ensure safety standards amidst concerns over the airline’s ongoing troubles. SpiceJet, which once held a significant share in India’s aviation market, has seen a sharp decline in its market presence, financial performance, and operational reliability.
Adding to its woes, the airline has been battling unpaid dues, delayed salaries, and legal challenges. In recent developments, SpiceJet informed the Delhi High Court of its commitment to settling outstanding payments by September 30, 2024. Despite its struggles, the airline’s spokesperson expressed confidence in raising the necessary capital and resuming regular operations. Meanwhile, SpiceJet has placed 150 crew members on furlough due to the lean travel season and a reduced fleet size.
Here are ten key developments:
1. The DGCA placed SpiceJet under enhanced surveillance after identifying deficiencies in a special audit conducted in August 2024. The airline will now face increased spot checks and night surveillance to ensure compliance with safety protocols.
2. SpiceJet’s market share has declined sharply this year, dropping to 3.1% in July from 5.6% in January. This represents a significant fall from its earlier market presence, which stood at 14.9% in 2020.
3. Financial stress has led to multiple flight cancellations over the past week. Additionally, unpaid dues resulted in disruptions to SpiceJet’s Dubai operations, where passengers were unable to check in for their flights.
4. The airline is facing legal challenges over unpaid dues to aircraft lessors, with several lessors seeking SpiceJet’s liquidation. The Delhi High Court has reprimanded the airline for its inability to settle its financial obligations. Earlier on Thursday, reports emerged that the Dubai International Airport has barred SpiceJet passengers from checking-in. The report said the action has been taken after pending dues from the airline to the international airport.
5. SpiceJet employees are also affected by the financial crisis, with salaries delayed for two months. Protests have erupted among ground staff at airports, with workers demanding unpaid wages.
6. The airline is fighting to raise ₹3,000 crore through a Qualified Institutional Placement (QIP) of shares to shore up capital. The company expects shareholder approval by September 13, with the entire exercise slated for completion by September 30.
7. In response to the operational and financial crisis, SpiceJet placed 150 cabin crew members on furlough for three months. The airline assured that furloughed employees would retain their employment status and health benefits during this period.
8. Despite the financial strain, SpiceJet recorded a consolidated net profit of ₹158.2 crore in the first quarter of 2024, a 20% decline from the previous year but an improvement from the March quarter’s ₹126.9 crore profit.
9. SpiceJet is facing challenges in maintaining punctuality, with only 52% of its flights departing on time as of late August. This is the lowest on-time performance among India’s domestic airlines.
10. The DGCA’s previous interventions in 2022 and 2023 saw similar enhanced surveillance measures imposed on SpiceJet, leading to temporary restrictions on its operations to ensure safety and regulatory compliance.
