The SpiceJet crisis

SpiceJet saw almost a dozen of its Boeing 737s being taken back by lessors due to which it had to cancel a large number of flights

India’s second largest budget carrier, SpiceJet, seems to be in danger of joining the long list of companies that burnt themselves out in the Indian aviation sector. In the last few weeks, SpiceJet has displayed all the symptoms of an eventual collapse—mass flight cancellations, thinning fleet, delayed staff salaries, lack of investors, dipping stock prices and mounting losses since March this year.

The airline was believed to have been facing a financial crunch for some time now. The crisis started affecting its operations around mid-November when the airline suddenly cancelled 50 flights, of the 300 that it usually runs, without informing passengers. SpiceJet saw almost a dozen of its Boeing 737s being taken back by lessors due to which it had to cancel a large number of flights. The airline puts the number at over 50, reportedly claiming that it needs more funds, but the promoter, Sun Group chief Kalanithi Maran, has not been able to find an investor.

The cancelled flights come in the wake of the airline selling cheap tickets in flash sales held earlier this year. Many stranded and angry passengers have now been forced to buy expensive flight tickets at the last minute. The Directorate General of Civil Aviation (DGCA) has ordered a probe of the matter after many passengers lodged complaints against the airline.

The crisis deepened on 1 December with reports of the airline delaying salary payment to its 5,000-odd employees for the first time. The current crisis is already being seen as a repetition of the Kingfisher fiasco which began with the same symptoms. According to analysts, the losses due to the cancellations could run into Rs 15-30 crore by month end, which means the airline is losing anywhere between Rs 1.5 crore and Rs 2 crore per day.

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