SpiceJet stays firmly grounded as oil firms refuse fuel on credit

A government reprieve this week hasn't helped SpiceJet much, as the carrier's operations have been grounded from this morning because oil companies refuse to sell jet fuel to the cash-strapped airline on credit (See: SpiceJet gets some breathing space after meeting minister).

The airline, told the government it had no money to pay oil companies or airports, and said its aircraft were not being refuelled and the operations would now resume only subject to getting fuel.

Delhi, for instance, did not see any SpiceJet flight operating on Wednesday. A day earlier only a handful of its truncated schedule of 239 flights could operate on aircraft that had some fuel in stock.

An airline source said that planes were parked high and dry at airports with no fuel. "What can we say about flights resuming? It all depends on whether the oil companies give us fuel," an airline official.

Another source said the airline 'hoped' the issue would get resolved in the afternoon with the oil ministry relenting. "Flights till noon have been cancelled. Once the oil ministry relents, we will draw up another schedule," the source said, indicating that the government could force the state-run oil companies to give it credit.

The fuel trouble has come at a time when dense fog in the north makes it essential for aircraft to carry more fuel due to frequent diversions from low visibility Delhi to other cities. Last January, another airline's plane had a narrow escape when it landed in Jaipur with an empty fuel tank after being diverted from Delhi due to fog in the capital.

"The aviation ministry's diktat of letting completely broke SpiceJet fly will work only on agencies under it like the directorate general of civil aviation and Airports Authority of India. But agencies not under it will not listen. So oil companies will not give fuel on credit and banks are also unlikely to lend to the airline especially after burning their fingers with Air India and Kingfisher," said an industry source.

The airline industry is blaming the aviation ministry for the troubles being faced by passengers. "The ministry says it is taking the stand that SpiceJet must operate to avoid passenger suffering. But are flyers not suffering due to planes not taking off? How is this situation different from the airline being officially grounded," said another airline official.

The number of passengers affected by SpiceJet troubles is very high as the airline had since early this year been offering tickets at rock bottom fares. So a large number of people have booked till October, 2015, and now they are finding their flights cancelled.

"The aviation ministry should act against the airline for luring passengers with low fares despite knowing its financial situation fully well. While SpiceJet resorted to constant fire sales to raise some working capital, passengers are the ultimate victims," commented an industry observer.