Airline says can't discuss dues publicly, denies grounding of planes
SpiceJet owes over Rs 200 crore (Rs 2 billion) to Airport Authority of India and various tax authorities as adverse operating environment has impacted its performance. The Rs 200 crore dues includes Rs 110 crore outstanding to Airport Authority of India which was disclosed by the civil aviation ministry last week.
The issue has come to spotlight after anxious airline employees wrote to the airline management last week on not receiving tax deducted source certificates for the purpose of filing tax returns. On Tuesday SpiceJet said it can not discuss the issue about pending dues as it "privileged and confidential information" but the airline's auditor had last year observed delays in depositing of tax dues.
In their audit report for FY 12-13, S R Batliboi & Associates which audited the accounts said SpiceJet was not regularly depositing "undisputed statutory dues" including TDS, value added tax and service tax and there have been delays in large number of cases.
SpiceJet posted an annual loss of over Rs 1,000 crore (Rs 10 billion) last fiscal and has launched a series of discount offers to tide over cash flow problems. The airline has 52 aircraft fleet comprising Boeing 737s and Bombardier Q-400s and is Directorate General of Civil Aviation's engineering audit.
The regulator ordered an engineering check of SpiceJet fleet following instances of aircraft getting grounded due to inadequate spares. "We, like other airlines, are subject to regular and ongoing audits by DGCA from time to time and we are fully compliant with every safety regulation,'' SpiceJet spokesperson said. The airline said all its planes were fully airworthy and operational except three planes (a Boeing 737 and a Q400) which are undergoing scheduled maintenance check and a Q400 plane which is maintenance following a bird hit.
"None of the planes are grounded for lack of spares. Our fleet utilisation is about 12 hours for Boeing and will increase to 13 hours as we add new flights. The utilisation of Q400 planes sightly less due to the different nature of their mission,'' the spokesperson added.
This is third time in this year that SpiceJet has come under regulator's scrutiny. Earlier this year DGCA forced the airline to withdraw one rupee fare and also issued a notice for on board dance by its crew.
"SpiceJet has lacked a clear strategic direction. While the current leadership has launched a range of initiatives (on time guarantee, hot meals, myspicetrip.com etc) towards brand building and lifting the average revenue collection per passenger these positives will probably fail to offset the negatives to yields and capacity outlook from AirAsia's India entry,'' HSBC Global Research wrote in their report in June. The airline's market share grew to 19 percent in June and it stands third behind IndiGo and Jet Airways.
SpiceJet, requires $200 million (approximately Rs 1,200 crore) to turn operations around, according to the Centre for Asia Pacific Aviation (CAPA). "Without adequate capitalisation to fund the turnaround (of SpiceJet), no serious improvement can be expected. Investor interest will remain low unless the new government initiates quick stability measures," CAPA has pointed out.
The airline is in discussion with foreign investors and financial institutions for raising capital and could raise as much as $100 million (Rs 600 crore).
