As SpiceJet drags feet on info, DGCA audit of airlines to miss deadline

Written by Roudra Bhattacharya | New Delhi | Updated: Aug 22 2014, 13:36pm hrs
SpiceJet airlineThough SpiceJet has been improving market share and passenger load factor in the past months, it is believed to be behind on several payments.
The financial and engineering audit of domestic airlines being conducted by the Directorate General of Civil Aviation (DGCA) will get delayed, with low-cost carrier SpiceJet yet to furnish complete information, a top official at the aviation regulator told FE.

To assess the operational health of airlines reeling under accumulated losses of almost Rs 50,000 crore, the DGCA had first asked all carriers to submit detailed financial data for the 2013-14 fiscal by mid-June. Later, in July, it again asked for additional inputs. This information is expected to primarily help in assessing the safety preparedness of the airlines, and understand whether the recent trend of aggressive price discounts is sustainable.

We had hoped to conclude our study by end-August, but now it will get delayed at least by a month. Spicejet is yet to submit all of the information, the DGCA official said.

Added another industry source close to the development, Spicejet has submitted a good amount of data previously, and the remaining will be submitted very shortly.

Spicejet, which has liabilities worth almost Rs 5,000 crore and a negative net worth of Rs 1,145 crore, is being closely watched by the regulator because of several issues. Though the airline has been improving market share and passenger load factor in the past months, it is believed to be behind on several payments, such as dues to airports, service tax and TDS for employees.

Even as two new players , AirAsia and Tata-SIA's Vistara, enter the market and at least six more are granted initial approval by the aviation ministry, India's airline industry is under severe stress with margins now wafer- thin for many. The biggest impact is due to high jet fuel prices, which account for half the total costs, and high airport costs, while rising fleet maintenance expenses on a weak rupee (major aircraft checks are done overseas) have created further trouble.

While state-owned Air India, which has over Rs 30,000-crore worth of accumulated losses, is in the midst of a government-mandated turnaround plan, among private players Kingfisher is already grounded and banks are now liquidating its assets. Jet Airways and Spicejet are also in a tough spot in FY14, Jet posted a record loss of about Rs 4,000 crore while Spicejet also saw a Rs 1,003- crore loss.