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Mass cancellation of flights by SpiceJet leaves passengers stranded

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The headwinds at SpiceJet Ltd are only getting stronger, making the going tough for the cash strapped budget airline as it cancels flights, delays spare parts replacement and payments to vendors. 

The airline’s financial troubles are fast spilling over to the operations side with over 50 of the more than 300 flights it operates daily being temporarily suspended on account of shortage of aircraft.

On Thursday, hordes of passengers were left stranded due to such a large-scale cancellation. The airline has grounded 7-8 of its aircraft, which makes it difficult for it to operate some of its flights, for which it has already sold tickets, as per schedule. 

Spicejet’s chief operating officer (COO) Sanjiv Kapoor, said they would return to normal schedule by November 30. When asked whether this would happen by getting grounded aircraft back on the runway, his one-word reply was; “Yes”

But SpiceJet’s problems don’t end here. The aviation regulator Directorate General of Civil Aviation (DGCA) has found the airline to be procrastinating replacing spare parts. DNA learned about this from a senior and reliable source at the DGCA.

Airlines have to follow aircraft maintenance programme laid out by aircraft manufacturers and DGCA. Any violation on that front could lead to safety issues. Every part in the aircraft has a life and has to be replaced in a specified time. This requires airlines to keep adequate spare parts so that they are readily available at any given time.

And maintaining such a spare parts inventory needs huge cash. For instance, every airline needs to keep at least one or two spare engines, which cost millions of dollars.

An industry source, who spoke on condition of anonymity, said the airline was paying salaries of employees on time but was holding up payments of vendors.

“They have identified payments, which are critical for running the airline, and are meeting up these commitments on priority but are holding up payments to vendors. Those being paid on priority are oil marketing companies, Airports Authority of India (AAI) and aircraft lessors,” he said.

According to him, the airline had slipped on its payments to telecom companies, suppliers and other vendors many time over the last few months as they are crunched for money.

The income tax deducted at source by the budget airline for the fiscal 2014 was deposited with the Income Tax Department only last month.

“The fall of SpiceJet will be much more disastrous than Kingfisher as they holding back a lot of information,” said a source in the know of the deepening crisis at the no-frill airline.

The airline, however, denied that financial strain has started to show ‘stress’ on the airline. In a clarification statement issued by it to dna, it said; “We wish to clarify that it is completely untrue and seems based on some rumours being circulated by some motivated intentions. We categorically deny that the DGCA has launched any safety or service check on SpiceJet. These stories appear to be planted by motivated parties.”

It said it would be filing a denial with the BSE on it. 

The clarification further said; “There are also rumours being spread by certain motivated quarters about all flights from Chennai being cancelled. These rumours are categorically untrue. There are 31 daily departures from Chennai in our current modified schedule, of which all are operating normally and as of 900am this morning, 9 departures had already taken place. The timing and lack of truthfulness in these stories suggests vested interests are at play.” 

 

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