Why SpiceJet’s Aircraft Are Losing Their Way

Jul. 20—SpiceJet has hit a snag. Well, not one but a series of snags—so many that the aviation regulator had to intervene. After three SpiceJet aircraft reported issues on the same day, the Directorate General of Civil Aviation (DGCA) issued a show-cause notice to the airline on 5 July, and said The DGCA came down heavily on the low-cost carrier and said it had "failed to establish safe, efficient and reliable air services".

Between 19 June and 11 July alone, at least nine malfunctions were reported, from failure of weather radar to smoke in the cabin, at times leading to emergency landings. Only three of these were reported on Boeing 737, the fleet under enhanced surveillance of the DGCA since March, and the rest were on Q400s. This shows the issue is not specific to one model. SpiceJet has 59 Boeing 737 and 32 Q400 aircraft, according to the latest data.

"There is a pattern to these issues. They are to do with maintenance and engineering, and point to a lapse in the safety management system of the operator," said Amit Singh, a flight safety specialist. All issues may not be severe, but a series of small incidents can be a precursor to an accident, he added.

These incidents have also made flyers more wary of boarding SpiceJet flights. Around 44% of respondents polled by LocalCircles on 6 and 7 July said they were avoiding the third-largest carrier, compared to 21% for Air India and IndiGo. Of late, snags have been reported on other airlines as well, but none as frequent as SpiceJet's.

Degrading service

Beyond risking passengers' safety, the poor health of SpiceJet's aircraft, among other factors, has been taking a toll on its service quality as well. In May, the latest month for which the data was available, 53,707 SpiceJet passengers suffered on account of "boarding denied", cancellation, or delays beyond two hours. The count was 51,411 for IndiGo, which flew six times as many passengers as SpiceJet. For every 10,000 passengers boarding SpiceJet, 466 faced some kind of hassle or the other, far higher than its peers. Among the six largest carriers, SpiceJet was the last in terms of on-time departures from metro airports ( Delhi, Mumbai, Bengaluru and Hyderabad) in May.

While SpiceJet boasts of the highest passenger load factor among Indian airlines, it has conceded market share of late: from being the second-largest with 16.6% share in January 2020, it is now the third largest with 9.5% market share.

Financial woes

Experts say the incidents are symptoms of a deeper malaise. The pandemic dealt a severe blow to the entire airline industry, but SpiceJet's financial woes are older. Its finances are so in the red that even DGCA made a note of it in its latest notice. For the first three quarters of 2021-22, SpiceJet reported a cumulative loss of INR1,259.2 crore. It had a negative net worth of INR3,855.2 crore as on 31 December 2021. Its results for the March quarter are delayed because of ransomware, which affected the audit process.

The cash-strapped airline has defaulted on its payments to vendors and airport authorities. It's operating on cash and carry, as the credit facility has been withdrawn owing to non-payment. It was even dragged to the court by the aircraft manufacturer ( De Havilland), lessor (Goshawk and its trustee), maintenance, repair and overhauling service provider (SR Technics), over payment dues, often settling outside the court.

Maintenance neglect

The lack of funds has hurt SpiceJet's operations, caused lay-offs, and most recently lapses in deposits of provident funds of employees, among other problems. Another grave casualty appears to be the neglect of maintenance and safety. The company's earnings data suggests a lower allocation of expenses towards maintenance during April- December 2021 compared to the corresponding period in 2020.

Even DGCA, in its notice, highlighted the lack of payment to vendors and suppliers, which has led to a "shortage of spares". This has often forced the airline to frequently invoke minimum equipment list (MEL), a provision that allows airlines to fly an aircraft even with some parts being non-operative.

" SpiceJet has overused this provision, often flying planes that are overworked," said Mark Martin, chief executive of aviation consulting firm Martin Consulting. The company needs a fresh infusion of cash and a whole new team for maintenance and engineering to ride out this crisis, he added.

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