Did SpiceJet Flex Its Muscle To Get Government Support?

Wednesday, 17th December 2014 at 04:59am

The end seems to have been already at arm's reach for SpiceJet amidst a series of flight cancellations in recent weeks.

Lo and behold! The airline doesn't seem to have no problem keeping its balance to prevent it from plunging to its own demise.

Though the government denied any preferential treatment given to the troubled airline, rumors persist that it was indeed true.

As if it was not enough, the limping carrier has been able to secure favorable credit line by AAI and fuel oil companies. What's more? The government has urged banks to extend fresh loans to SpiceJet and even proposed to Finance Ministry to relax its external commercial borrowing (ECB) rules for the airline.

This morning, for example, many of the airline's flights were either delayed or canceled after its planes were unable to fly for lack of fuel. Fuel companies refused to sell fuel to the airline after the latter failed to settle its mounting debt obligations to the former.

Interestingly enough, most of the delayed flights were able to set off in the afternoon and rumors of bailout from the government began milling around the media.

Reliable sources claimed that DGCA, the government-controlled aviation regulator, lifted its earlier order that prohibited the airline from selling advance ticket bookings beyond 30 days. It has now allowed the carrier to sell tickets up to March 31, 2015.

Looks like SpiceJet finally heaved a sigh of great relief on the lifting of DGCA's order. Otherwise, it would have forced itself to refund tickets for any canceled flights that it has already sold three months ahead.

The entire system of the government seemed to have worked in perfect coordination just to ensure SpiceJet's operations are smooth when Airports Authority of India (AAI) allowed its planes to use the airport facilities sans payment. The airline reportedly owes AAI Rs200 crore and additional Rs80 crore to several airport operators across India.

Rumor has it that the government has requested the Ministry of Finance to ease its rules in External Commercial Borrowing to grant the airline working capital.

A senior Minister official quickly issued a statement to deny any preferential treatment given to SpiceJet. He said though that they need to take appropriate actions for the convenience of the passengers without expounding more.

By: .

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