As SpiceJet seeks bailout, govt says ‘no assurance’

Airline approaches minister of state for civil aviation Mahesh Sharma, seeking urgent financial help to continue its operations.

By: ENS Economic Bureau | Agra/new Delhi | Published:December 16, 2014 1:56 am

Treading the path taken by Kingfisher Airlines, debt-laden SpiceJet, owned by the Chennai-based Sun Group, on Monday called for a bailout from the government. The airline approached minister of state for civil aviation Mahesh Sharma, seeking urgent financial help to continue its operations.

Incidentally, the plea from SpiceJet came on a day when the Directorate General of Civil Aviation (DGCA) granted the Air Operator Permit to Vistara – the joint venture between Tata Sons and Singapore Airlines – which would allow the carrier to begin commercial operation in India.

As senior company officials of SpiceJet approached Sharma requesting “urgent relief”, the minister said that any decision on government support would be taken at the “highest level”. He said the airline’s request would be put before the Prime Minister’s Office, the finance ministry and the ministry of petroleum and natural gas.

Asked about the government’s response to the airline’s plea, the MoS said, “No assurance has been given to them.”

The no-frill carrier, burdened with a debt liability of Rs 2,000 crore, has in the recent past cancelled more than 1,800 flights. Over the past three months, it has brought down its daily flights from 332 to 239.

The DGCA had given the airline time till Monday to release pending employee salaries and submit a schedule on paying vendor dues of close to Rs 1,600 crore. It is, however, expected that Airports Authority of India, which had threatened to put the airline on “cash and carry” mode soon if the airline failed to furnish bank guarantee of up to Rs 200 crore against its dues, would not press for immediate clearance and give the carrier some more time.

In the Lok Sabha on Monday, Sharma said that all private Indian airlines were suffering from financial stress. “It has been found that all private airlines are in varying degrees of financial stress,” said the minister, taking note of the DGCA audit of all airlines on the impact of financial stress on aviation safety. He further said that the airlines have been asked to optimise their operations and reduce financial burden without compromising the safety of aircraft operations.

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