SpiceJet ‘grounded’ as oil companies refuse fuel; fares go north

  • HT Correspondent, Hindustan Times, New Delhi
  • Updated: Dec 18, 2014 02:55 IST

Thousands of passengers faced a harrowing time in airports across the country on Wednesday as SpiceJet, refused fuel by oil companies, grounded all its flights till 4pm.

To make matters worse, spot fares on key sectors went through the roof as passengers made a desperate dash for a limited number of seats in other airlines during peak holiday season.

SpiceJet -- which seems to be headed the Kingfisher way if it doesn’t get the funds it needs in a hurry -- ended up operating only 70 of its 239 daily flights. On Tuesday, only 35 flights had taken off.

Violent protests were reported as passengers landed at airports with no prior information of flights being cancelled.

Security staff had to intervene at Delhi airport’s Terminal 1D as anger mounted and flyers cornered SpiceJet staff. Similar scenes were witnessed in Mumbai.

“This is criminal negligence. We were given no information, no refunds and have absolutely no idea what to do. I booked my tickets two months in advance,” said a passenger who was to fly to Mumbai from the Capital with five members of his family.

“I have a connecting flight to catch from Kolkata, which I will miss. These people are just not bothered. The cheapest ticket available is for Rs 16,000. I don’t know whom to talk to,” said a senior executive of an MNC.

Compared to December last year, spot fares were 40-60% more expensive Wednesday while the jump in comparison to June was 40-75%.

From Delhi, web fares for December 18 (Thursday) were going at Rs 14,000-60,000 for Mumbai, Rs 14,000-51,000 for Hyderabad, Rs 14,800-69,000 for Bangalore, Rs 19,900- 65,000 for Goa.

Sources said aviation regulator DGCA was keeping a close tab on the fares.

“The same thing happened when Kingfisher went down. We had suggested then too that airlines should develop a mechanism to adjust stranded passengers on empty seats,” said Subhash Goyal, president, Indian Association of Tour Operators.

Having burnt their fingers with Kingfisher, oil companies refused to heed an aviation ministry request to give SpiceJet a 15-day credit line.

The budget carrier, which is on a cash-and-carry basis with oil firms, could resume operations only after making payments for the days.


SpiceJet cancelled is flights on Wednesday, causing inconvenience to passengers. (Vidya Subramanian/ HT photo)

Meanwhile, the parent company behind SpiceJet Ltd said it could not afford to spend the amount needed to rescue the beleaguered low-cost airline.

Controlled by billionaire Kalanithi Maran, SpiceJet needs an immediate infusion of about Rs. 2,000 crore to survive.

"We do not have the liquidity to invest large sums at this time, which is why we need bank financing for which the promoters (main shareholders) are willing to provide a guarantee," SL Narayanan, chief financial officer of Sun Group, SpiceJet's parent, told Reuters in an interview.

"We cannot do more than this."

SpiceJet was granted a reprieve on Tuesday as the civil aviation ministry had said airport operators would be asked to give the airline 15 days to make payments, while state oil companies would be asked to give credit for up to 15 days.

The civil aviation ministry also said banks or other financial institutions could be asked to lend up to Rs 600 crore to SpiceJet, backed by the personal guarantee of Maran.

The measures, the ministry said, were aimed at avoiding a collapse which it said would be a "major setback" for the civil aviation sector.

Shares in SpiceJet closed down 5.4% on Wednesday and have now lost a third of their value this month.

(with agency inputs)

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