SpiceJet eases out of DGCA enhanced surveillance following inspections of 23 aircraft

Budget carrier SpiceJet has been taken off from 'enhanced surveillance regime' after the aviation watchdog the Directorate General of Civil Aviation's (DGCA) conducted inspections on a total of 23 aircraft and made 95 observations.

The civil aviation regulator conducted 51 spot cheques across 11 locations specifically on the airline's Boeing 737 & Q-400.

Earlier this month, news agency PTI had reported that SpiceJet was under enhanced surveillance for over three weeks due to various financial challenges faced by the budget airline in recent months. SpiceJet had been dealing with cases of lessors seeking repossession of leased aircraft, though some issues have been resolved by the airline.

SpiceJet shares surge 

Shares of SpiceJet witnessed a nearly 4 per cent surge, while the benchmark indices remained flat with a negative bias.

The enhanced surveillance involves increased night surveillance and spot cheques to ensure that financial issues do not lead to potential adverse impacts on flight operations, and that safety standards are not compromised.

The primary objective of the enhanced surveillance was to prevent any adverse impact on flight operations due to financial concerns.

In July of last year, the regulator had instructed SpiceJet to reduce the total number of flights by 50 per cent for eight weeks due to repeated safety incidents. During this period, the airline was placed under "Enhanced surveillance."

The restrictions were lifted on October 30 of the same year.

Financial assessment 

In a financial assessment conducted by DGCA in September 2021, it was revealed that SpiceJet was operating on a cash and carry basis, leading to delayed payments to approved vendors and resulting in a shortage of spares, leading to frequent invocation of Minimum Equipment Lists (MELS).

Earlier this month, the Supreme Court directed SpiceJet to pay the entire arbitral amount of Rs 380 crore to its former promoter, Kalanithi Maran, emphasising the importance of conducting business with 'commercial morality.'

However, the Sun Group, which now owns SpiceJet, has rejected the possibility of an amicable settlement with the other party.

The airline has also been defaulting on aircraft lease rental payments, prompting lessors to file insolvency petitions against the airline. Due to financial constraints, the airline has been unable to capitalise on the growth and consolidation in Indian civil aviation, which has surpassed pre-Covid air traffic numbers. Currently, the airline holds a market share of 5.4 per cent, slightly ahead of new entrant Akasa Air, which holds 5 per cent of the market share.