Bleeding no-frills carrier SpiceJet has got a 7-10 day lifeline from the government after it pleaded before aviation authorities that it would have to shut down operations “by Monday night” if the government didn’t provide any relief.
On a day when the government gave a go-ahead to the Tata-Singapore Airlines-backed Vistara to launch services in India, top officials from Spicejet and Kalanithi Maran-controlled Sun Group, its parent company, pleaded with the government to offer a credit line of sorts that will allow it to clear its mounting dues to oil companies and airport operators in a staggered manner.
“After consultations with other ministries and the PMO, the airline has been given time for making the payments. The promoters have been asked to submit bank guarantees, infuse capital and submit a clear funding plan,” said an aviation ministry official.
The government had two major concerns if SpiceJet shut down. First, it would have directly or indirectly impacted jobs of over 20,000 people. The airline has around 5,000 employees. Secondly, shutting down operations during the peak season would have resulted in chaos. SpiceJet’s domestic market share stands at 17.3%. Shutting down operations would have upset travel plans of thousands of vacationers during the holiday season.
The airline has sold advanced tickets up to October next year.
As a temporary measure to cut costs, the airline has stopped in-flight meal services. SpiceJet is staring at a financial collapse after its efforts to find an investor failed and needs an immediate infusion of about Rs 2,000 crore to survive.
Thanks to the government’s intervention airport operators like Airports Authority of India, to which it owes around Rs 200 crore, won’t put the airline on cash and carry which they were planning to do with immediate effect and oil companies won’t press for their dues, as of now.