New Delhi: From all available indications, various arms of the Government have come together to prevent SpiceJet from dying. According to sources, the airline has said in its multiple presentations to officials of the Ministry of Civil Aviation and DGCA yesterday that it has enough money to take care of immediate payments and needs the Government to further provide it a soft loan of Rs 1,000 crore to tide over the present crisis. These sources said it has pleaded with the Government to either provide a direct loan or stand as a guarantor for the loan which can then be raised from banks. Separately, official sources had confirmed yesterday that the airline's total liabilities stand at Rs 2,000 crore, of which Rs 1400 crore must be paid off immediately to various stakeholders.
SpiceJet COO Sanjiv Kapoor denied reports that any sort of financial assistance has been sought from the Government though. He tweeted "No one has asked for a bailout. Please do not believe speculative media reports". He also said on twitter that "No financial plan submitted to DGCA today. Objective of meeting was to discuss financial impact of 30 day booking limit on the airline.Meanwhile, oil companies seem to have agreed to provide fuel for the next 7-10 days to SpiceJet despite the airline's dues. Sources said the Airports Authority of India has also been asked to not seek payments before every flight for airport services. The decision to hold off any tough action on SpiceJet has been a political one, because it makes little sense any other way. Also, this largesse by the Government may be short lived as the airline has been given just 7-10 days to tidy things up.
It is all very well for the Government to come to the aid of a near bankrupt airline which employs over 5000 people and whose demise or even temporary suspension of operations will impact thousands of flyers apart from employees.
But the questions we want to raise are these: Why is the Government helping just one airline and not the entire aviation sector?
What prevents other airlines to now queue up for Government dole, citing similar circumstances? Why does the Government then not devise a bailout or assistance package for cash strapped Indian airlines instead of tackling this problem on a peace meal basis?
16/12/14 Sindhu Bhattacharya/First Biz
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SpiceJet COO Sanjiv Kapoor denied reports that any sort of financial assistance has been sought from the Government though. He tweeted "No one has asked for a bailout. Please do not believe speculative media reports". He also said on twitter that "No financial plan submitted to DGCA today. Objective of meeting was to discuss financial impact of 30 day booking limit on the airline.Meanwhile, oil companies seem to have agreed to provide fuel for the next 7-10 days to SpiceJet despite the airline's dues. Sources said the Airports Authority of India has also been asked to not seek payments before every flight for airport services. The decision to hold off any tough action on SpiceJet has been a political one, because it makes little sense any other way. Also, this largesse by the Government may be short lived as the airline has been given just 7-10 days to tidy things up.
It is all very well for the Government to come to the aid of a near bankrupt airline which employs over 5000 people and whose demise or even temporary suspension of operations will impact thousands of flyers apart from employees.
But the questions we want to raise are these: Why is the Government helping just one airline and not the entire aviation sector?
What prevents other airlines to now queue up for Government dole, citing similar circumstances? Why does the Government then not devise a bailout or assistance package for cash strapped Indian airlines instead of tackling this problem on a peace meal basis?
16/12/14 Sindhu Bhattacharya/First Biz
