Jul. 21—SpiceJet has hit a snag. Well, not one but 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. The DGCA said the low-cost carrier had "failed to establish safe, efficient, and reliable air services".
Between 19 June and 11 July alone, at least nine malfunctions were reported in the media, 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, with the rest 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.
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 have appeared in the media as frequently as SpiceJet's.
SpiceJet, however, has denied safety concerns, and said it was wrong to brand everything as an "incident". A spokesperson for the airline earlier told Mint, " SpiceJet has been running a safe airline for 17 years. The kind of incidents being talked about are routine across industry and do not compromise on safety and airworthiness."
Deteriorating service
Beyond the reported incidents of snags, regulatory data suggests that SpiceJet may have fallen behind in quality of service as well. Partly due to a ransomware attack 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 problem or the other, far more than its peers. Even discounting the ransomware issue, SpiceJet ranked poorly in April 2022 on this metric (179 per 10,000 passengers), with only Air India faring worse (328) among the top six.
SpiceJet boasts of the highest passenger load factor among Indian airlines, but has conceded market share of late. From being the second-largest with 16.6% share in January 2020, it has now been overtaken by GoFirst and now has the third-largest market share of 9.5%.
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 much 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 INR3,898.4 crore as on 30 September 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 is operating on cash and carry, as the credit facility has been withdrawn because of non-payment. It was even dragged to court by the aircraft manufacturer ( De Havilland), lessor (Goshawk and its trustee), maintenance, repair and overhauling service provider (SR Technics), over payment dues, often reportedly settling outside the court.
Maintenance concerns
The lack of funds has hurt SpiceJet's operations, and according to media reports, 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 expenses during April- December 2021 compared to the year-ago period. Even DGCA, in its notice, highlighted the lack of payment to vendors and suppliers, which has led to a "shortage of spares".
On financial strain, SpiceJet said in an emailed response that the present situation—of negative net worth and financial losses—was not unique to it. "A cash-and-carry model indicates that the airline is paying in advance for the services it is using and ensures there are no dues. This is legally permitted and as per laid down policy," the company said.
The article has been updated with SpiceJet's response. The company's detailed emailed response to this article is below:
On repeated reports of malfunctions: There has been no incident reported in SpiceJet for over two weeks now. A section of media having little understanding about aviation has been unfortunately branding everything happening at the airline as a safety 'incident' and we hope Mint does not fall in this trap of sensationalism.
For example, some in the media termed it as an 'incident' when one of our aircraft was on ground in Dubai for maintenance on July 11. SpiceJet, following global best practices, and as precaution, had arranged an alternate aircraft for passengers when a maintenance issue was found with one of its aircraft, which was irresponsibly reported by some in the media as an 'incident'. This was not an 'incident' by any stretch of imagination or even by the DGCA's definition of an incident.
Multiple such minor things happen on a daily basis in airlines across the globe and are a part and parcel of daily operations.
In fact, the Director General Civil Aviation has on record told the media that, "on an average about 30 incidents take place daily, including go-around, missed approaches, diversion, medical emergencies, weather, technical and bird hits. Most of them have no safety implications. On the contrary they are sine qua non of a robust safety management system."
On "failure of weather radar to smoke in the cabin": The investigation report of the said case has been submitted to the regulator. No such findings of an unserviceable weather radar were deduced. Maintenance actions were found satisfactory before dispatch of the aircraft from Mumbai to Durgapur.
On May data: On the morning of May 25, SpiceJet faced a ransomware attack that impacted our flight operations. For most part of May last week, we were mostly on a manual mode as systems remained down. This was an unprecedented situation. While SpiceJet managed to operate all passenger flights there were considerable delays and hence our numbers for May are not the right benchmark for comparison. A similar analysis for April 2022 would reveal that our count stood at 16,244 while that of IndiGo was 30,184 and Air India's was 24,587. In March, our count was 13,859 as compared to IndiGo's 114,321 and AI's 14,045.
On finances: The present situation is not unique to SpiceJet. Not even a single domestic airline in India has a positive net worth. No Indian airline has posted a profit in the last two years except for Q3 FY2022 (when SpiceJet reported a profit too). There are many domestic airlines which haven't been profitable since inception. A cash-and-carry model indicates that the airline is paying in advance for the services it is using and ensures there are no dues. This is legally permitted and as per laid-down policy.
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