Update, July 27:The DGCA has ordered SpiceJet to operate just 50 per cent of its sanctioned flights for eight weeks. “The number of departures of M/s Spicejet are hereby restricted to 50% of the number of departures approved under Summer Schedule 2022 for a period of 8 weeks from the date of issue of this order, in accordance with powers conferred under rule 19A of the Aircraft Rules, 1937,” the order said.
Recently, Arun Kumar, the Director General (D.G.) of the Directorate General of Civil Aviation (DGCA), and Ajay Singh, chairman and managing director of SpiceJet, stated in separate media interactions that on an average there are about 30 incidents/occurrences every day involving Indian registered carriers.
These incidents, in the around 3,500 daily flights that are currently operated by Indian carriers, range from go-arounds to incidents relating to air proximity, landing in wrong runways, hard landings, runway incursions, missed approaches, bird-hits, medical emergencies, technical issues, weather, ATC mistakes, and even broken armrests or improperly attached windowpanes.
Extrapolating from that number, Indian carriers experience around 10,950 incidents a year, a number that contrasts starkly with the 2,186 occurrences, including incidents, accidents, and serious incidents (5.91 a day) that were reported by the DGCA in 2019 in its Safety Report 2020.
Both Arun Kumar and Ajay Singh cited the number of 30 incidents a day in the wake of the DGCA taking a dim view of the rapidly falling safety standards in the operations of SpiceJet, which currently operates around 90 aircraft. The DGCA had issued a show-cause notice to the airline a few weeks ago.
But the incidents have continued, with a SpiceJet flight from Mumbai to Srinagar delayed for six hours on July 9 after a check by a joint DGCA and SpiceJet team found that the flight was being operated without the mandatory 25 life jackets on board. On July 10, the outer windshield of another aircraft cracked minutes after its departure from Chennai.
On July 11, a Dubai-Madurai flight was delayed after the airline’s Boeing B737 Max aircraft’s nose wheel malfunctioned. Though it did not result in any major hiccup and the passengers were flown back to India on an alternative aircraft from Mumbai, it was the budget airline’s tenth technical malfunction in 24 days.
Smoke seen in the Delhi-Jabalpur SpiceJet flight on July 2. A grab from a video posted by @saurabhdigidir**. | Photo Credit: PTI
A petition has been filed in the Delhi High Court seeking a ban on SpiceJet’s operations, with the petitioner seeking a commission of inquiry to look into the airline’s operations.
Financial trouble?
Although SpiceJet has repeatedly denied it, the industry view is that the airline’s mounting financial losses might be the primary reason behind the recent spurt in incidents. Experts cite the example of the July 5 incident when a SpiceJet cargo flight from Kolkata to Chongqing (China) was forced to return after takeoff when the pilots discovered that the weather radar was malfunctioning.
Pilots flying for SpiceJet said this was a repetitive snag. They claimed that not adhering strictly to maintenance best practices, using cheap and cannibalised spares and components, and less than failproof control protocols are the prime reasons for SpiceJet’s poor maintenance record.
In March 2020, the then Civil Aviation Minister Hardeep Singh Puri had shared some statistics in Parliament, according to which about 70-80 per cent incidents [across all airlines] occurred due to engineering/technical issues, including system component failure; about 15-20 per cent on account of operational issues, including non-adherence to standard operating procedures; and about 5-10 per cent on account of human errors.”
Said Captain Amit Singh, a flight safety expert: “SpiceJet presently has no head of safety. The previous incumbent was a young pilot who was attached to the chairman’s office after the B-737 accident at Durgapur.” The aircraft had encountered extreme turbulence during descent, injuring 14 passengers and three crew members.
Meanwhile, experts are asking why SpiceJet is being allowed to fly despite the unusual number of incidents it has reported and the regulator’s own admission that “a financial assessment carried out by it in September 2021 revealed that the airline is operating on cash and carry” with suppliers/approved vendors not being paid on a regular basis, leading to shortage of spares and frequent invoking of aircraft operating on the minimum equipment list (MEL).
Said a senior pilot with the airline: “In 2021, the DGCA found in its audit that SpiceJet is operating on a ‘cash and carry’ basis. Why weren’t any extra checks put in place? The DGCA should have told the airline not to fly without adequate spares, but the airline was allowed to operate after frequently evoking MELs.”
Mohan Ranganathan, aviation safety expert, said that SpiceJet “was a disaster waiting to happen”. Several pilots told Frontline that morale was low in the airline, with the company having failed to deposit Provident Fund contributions and failing to credit tax deducted at source contributions. Last November, the airline’s engineering staff went on a flash strike, seeking a restoration of salaries to pre-pandemic levels.
SpiceJet’s woes have put the airline in trouble at a time when it is struggling to stay afloat in a competitive field. Rakesh Jhunjhunwala-backed Akasa Air, another low-cost carrier, is looking to disrupt the airline industry. Pilots say that with Akasa Air choosing to operate Boeing MAX aircraft, it would be lucrative for SpiceJet pilots to move to Akasa.
SpiceJet, like several other Indian carriers, has been facing turbulence for a few years now. The COVID-19 pandemic only served to exacerbate the situation. The airline is facing a severe cash crunch and urgently needs a large infusion of funds.
In late 2021, SpiceJet managed to settle its long-pending dispute with aircraft manufacturer Boeing over the grounding of Boeing 737 MAX airplanes on its fleet and the delays in the supply of the remaining 142 aircraft. The airline has around 14,100 employees and has been able to halve its wage bill from Rs.1525.78 crore for the financial year ending March 2020 to Rs.676.24 crore for the year ending March 2021, but with some less-than-employee-friendly measures, including renegotiating contracts and reducing salaries to the bare minimum across most grades.
A Delhi-bound SpiceJet airplane catches fire mid-air on June 19. The plane made an emergency landing at Jay Prakash Narayan Airport, Patna. | Photo Credit: PTI
In February, it declared a modest Rs.42.45 crore as profit for the October-December 2021 quarter on the back of higher passenger traffic and a better performance of its logistics subsidiary SpiceXpress. It was SpiceJet’s first profitable quarter after seven quarters in the red. This quarter also saw a 149 per cent growth over the previous quarter.
Interestingly, SpiceJet is yet to declare its fourth quarter result. The airline has stated that its auditors are re-authenticating financial numbers after a ransomware attack on the company’s IT systems.
In the financial year ending March 2021, SpiceJet had totted up a loss of Rs.998.30 crore, a further fall from the Rs 934.75 crore loss for the period ending March 2020. As of March 2021, the airline has suffered three straight years of losses, totalling Rs.2,249.13 crore. It has a total debt of Rs.9,750 crore.
What lies ahead?
SpiceJet has weathered four management changes and survived the July 2008 fuel crisis when a surging demand from developing economies, a slowdown in production, financial speculation, and tension in West Asia had caused a huge spike in oil and gas prices. In December 2014, when Kalanithi Maran and his KAL Airways had transferred their shareholding to Ajay Singh, SpiceJet was just a day away from declaring bankruptcy.
SpiceJet has also been caught in a legal battle with Credit Suisse AG, the Swiss financial services company over the payment of over $24 million to Swiss maintenance, repair and overhauling (MRO) service provider SR Technics. Credit Suisse was mandated to receive the dues on behalf of SR Technics.
Hearing a plea from Credit Suisse AG, the Madras High Court had even directed the winding-up of SpiceJet. When the airline appealed in the Supreme Court, Chief Justice N.V. Ramana had asked SpiceJet to submit details about the company’s financial statements and said: “This is not the way you can run the airline.... You cannot say that you are a busy airline and not pay the dues; …. It is a serious matter. If you do not want to run the airline, we can declare you insolvent and refer the airline to liquidation.”
The Delhi-bound SpiceJet airplane at Jay Prakash Narayan Airport in Patna after it made an emergency landing. | Photo Credit: PTI
A few months ago, SpiceJet announced a settlement of its ongoing spat with De Havilland Aircraft of Canada Ltd. (DHC). As of June 2022, the promoters of SpiceJet, including the principal shareholder Ajay Singh, held 59.40 per cent of the company’s shares. While it is not clear who invested in the airline when Singh took over the airline from Maran, the names doing the rounds include JP Morgan Chase and Morgan Stanley.
In March, City Union Bank recalled a Rs.100 crore loan it had given the airline. The bank wants to declare SpiceJet a loan defaulter for an overdraft taken in 2014-15, but the airline is trying for an out-of-court settlement.
Although the DGCA is taking action, industry watchers say the regulator should have looked at SpiceJet’s books and conducted a special audit. Said aviation industry veteran and author of The Old Bold Pilot Captain Shakti Lumba: “Though SpiceJet is a ‘special airline’, favoured by the government of the day, the sheer number of incidents has forced the DGCA to act. How long can SpiceJet survive on just the goodwill of the government? Everything points to the airline going the Kingfisher way. It is only a matter of time.”
When the present owners bought the airline from Maran, they borrowed money from the market, added Lumba. “The debt is staring them in the face. SpiceJet has no money, lease rentals have gone up, the airline is not earning in dollars but has to pay in dollars for spares, parts, and leasing. The airline has now resorted to ‘aircraft robbing’ [a process where a required component is removed from a designated aircraft, inspected and installed on the unserviceable aircraft]. Aircraft robbing is legal—for example, if an airline has 10 aircraft, two are ‘used’ as Christmas trees with parts being cannibalised from them. Only thing is, SpiceJet is taking parts from leased aircraft. This is going to become a major problem in the immediate future.”
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