SpiceJet Taken Off DGCA Surveillance List

Budget carrier, SpiceJet, has been removed from the Directorate General of Civil Aviation's (DGCA) 'enhanced surveillance regime' after inspections were conducted on 23 of its aircraft, resulting in 95 observations, as reported by the aviation watchdog on Tuesday. 

The DGCA performed 51 spot checks at 11 different locations, focusing on SpiceJet's Boeing 737 & Q-400 planes. The airline promptly addressed the identified issues according to DGCA guidelines, leading to its removal from the enhanced surveillance regime. 

Earlier, news agency PTI had reported that SpiceJet was under "enhanced surveillance" for more than three weeks due to financial challenges faced by the budget airline. Several lessors were seeking to repossess aircraft leased to SpiceJet, and some cases had been settled by the airline. 

During the period of enhanced surveillance, SpiceJet's shares rose by nearly four per cent while benchmark indices traded flat with a negative bias. 

The enhanced surveillance involved increased night surveillance and spot checks to ensure that financial issues did not adversely affect flight operations and compromise safety. The main goal was to prevent any shortcuts in safety measures due to financial constraints. 

In the past, on 27 July of the previous year, the regulator had instructed SpiceJet to reduce the number of flights by 50 per cent for eight weeks due to recurrent safety incidents. This led to the airline being subjected to enhanced surveillance. The restrictions were later lifted on 30 October of the same year. 

A financial assessment in September 2021 highlighted that SpiceJet was operating on a cash-and-carry basis, causing delays in paying suppliers and leading to a shortage of spares and frequent use of Minimum Equipment Lists (MELS). 

Recently, the Supreme Court ordered SpiceJet to pay Rs 380 crore to its former promoter Kalanithi Maran, emphasising the need for business dealings to uphold "commercial morality." However, the Sun Group, which owns SpiceJet, has rejected any possibility of an amicable settlement with Kalanithi Maran. 

Furthermore, the airline has been defaulting on aircraft lease rental payments, prompting lessors to take legal action against SpiceJet in insolvency court. The airline's financial constraints have prevented it from taking advantage of the growth and consolidation in the Indian civil aviation industry, which has surpassed pre-Covid levels in terms of air traffic. Currently, SpiceJet holds a 5.4 per cent market share, slightly ahead of new entrant Akasa Air, which has a five per cent share.