SpiceJet woes leave thousands in the lurch

  • HT Correspondent, Hindustan Times, New Delhi
  • Updated: Dec 10, 2014 12:04 IST

In what could be their worst nightmare during holiday season, passengers of the 1,861 flights cancelled by SpiceJet are either unpacking their bags or are staring at soaring flight rates of competitors, unable to zero in on a wallet-friendly fall-back option.

Though the company will make full refunds to fliers, those who had to catch immediate flights could end up buying tickets from other flight operators at more than four times the rate at which they bought them from SpiceJet.

Sample the situation in Indore. Against a refund of Rs 3,500 for the economy-class ticket booked in advance, the spot fare in Jet Airways’ Tuesday evening flight for Delhi was upwards of Rs 15,500. Similarly, the fare for Wednesday’s Indore-Delhi flight was Rs 6,734 for tickets booked a day in advance.

The cash-strapped budget carrier had on Monday cancelled a total of 1,861 flights, a few to Kathmandu in Nepal and all others connecting domestic cities, till December 31. It also slashed the number of daily flights across the country to 275 from 340.

Of the states, the worst hit is probably landlocked Tripura which is highly dependent on flights for travel, particularly to Kolkata and Delhi.

The flight cancellations came after civil aviation minister Ashok Gajapathi Raju flagged his deep concern over the airline's financial health, saying SpiceJet "is giving us heart attacks".

Even with as many as 3.3 billion passengers expected to take to India's skies by the end of 2014, according to the International Air Transport Association, SpiceJet — the country's second-largest carrier by passenger share — is struggling to stay aloft.

The no-frills airline had reported its fifth straight quarter of net losses for the July-September period at Rs 310 crore, though it managed to gradually decrease losses.

SpiceJet laid out a recovery plan two months ago that involved using fewer and newer planes.

The company's shares surged nearly two weeks ago when Indian billionaire investor Rakesh Jhunjhunwala, whose stock picks are closely watched, bought 7.5-million shares or a 1.4% stake in the company. But the shares have since fallen back and are down some 80% from a 2007 peak.

SpiceJet has said repeatedly it is in talks with investors about a capital injection but no white knight has yet emerged.

Meanwhile, Airports Authority of India has reportedly put SpiceJet on cash-and-carry mode. It means the flight operator will have to pay money in advance for every landing and departure while other airlines have a one-month credit facility.

The cancellation of one flight results in a loss of around Rs 1,00,000 to AAI, the landing charge being Rs 30,000 per craft. As of now, the airline owes AAI around Rs 200 crore.

India has a congested airline market where fare competition is fierce and operating costs are high, and all but one of its big four carriers are operating in the red.

Spicejet's troubles have stirred memories of the failure of liquor tycoon Vijay Mallya's Kingfisher Airlines, which stopped flying in 2012 after running up huge debts.

(With AFP inputs)

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