SpiceJet allowed to sell tickets beyond 30 days

It has been allowed to take bookings until the end of March and a credit line for jet fuel has been extended by two weeks

Overturning the directions issued by regulator the Directorate General of Civil Aviation (DGCA), the civil aviation ministry on Tuesday lifted the 30-day booking restriction that the former had imposed on the ailing no-frills carrier SpiceJet. Civil aviation minister Ashok Gajapathi Raju and minister of state Mahesh Sharma held a meeting with petroleum minister Dharmendra Pradhan and officials from the finance ministry, following large-scale disruption of SpiceJet flights.

Experts are, however, not sure if the easing of restrictions will help SpiceJet now. “Removing restrictions on forward bookings is not going to help now as customer and travel trade confidence is very low. The earlier decision to restrict was a bad one and has hurt the airline significantly,” said Kapil Kaul, chief executive officer, Centre for Asia Pacific Aviation. The civil aviation ministry has given the airline two weeks (till December 31, 2014) to clear Airports Authority of India (AAI)’s Rs 200 crore dues or give an enhanced bank guarantee. The airline could be put on a ‘cash and carry’ mode if it fails to settle dues. The aviation ministry has asked the petroleum ministry to consider SpiceJet's pleas for easier credit terms after the airline was forced to cancel or reschedule its flights. SpiceJet can now accept bookings beyond 30 days, but till the end of March 2015.

Junior aviation minister Sharma said the government departments were working to find a solution on the issue. “Something is being worked out to resolve the SpiceJet crisis in the larger interest of passengers. All departments are working to find a solution. The government cannot take out solutions for an individual airline, but for the entire industry,” said Sharma.

According to Kaul, while the government’s overall response is helpful, many things are still unclear. “Seven-10 days’ time given, if true, is unlikely to change things. (I am) not sure how such a large funding will be secured in such a short time, especially as the promoter seems unwilling. The operational capability has been hurt and will get further impacted as leasing companies will aggressively push for repossession. (I am) not sure how long oil companies and the AAI will offer unsecured credit. Without immediate and significant funding, (I) see this as a closed case. SpiceJet needs to come clean on the funding prospects including timelines as their response is not convincing,” he added.

For the past several months, oil companies have put SpiceJet on cash and carry mode. It largely procures jet fuel from Bharat Petroleum Corporation and Hindustan Petroleum Corporation. “SpiceJet's payment determines the quantity of supply. It procures about Rs 3.5 crore of fuel from us each day,'' said a BPCL source. HPCL officials were not available for comment.

On Tuesday, however the airline was unable to fuel its aircraft in Mumbai, Delhi and Hyderabad, resulting in cancellations and rescheduling of flights. “There was some temporary operational issue. Flights have now resumed,” said a SpiceJet spokesperson in response to a query.

However, the stability of operations will depend on the airline securing relief or making quick payments to suppliers. Bookings have been hit following daily flight cancellations.

The lifting of booking restrictions was one of the main demands of the airline. “Any closure of bookings 30 days and beyond will be counter-productive as 30-35 per cent of our revenues comes from bookings beyond 30 days. Reducing that at this stage is not helpful as it makes it that much harder to meet expenses,” SpiceJet chief operating officer Sanjiv Kapoor had earlier said.