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Aviation company SpiceJet clears dues to AAI, will no longer operate on ‘cash & carry’ basis

By Priyanka Verma 
Updated Date

New Delhi: SpiceJet has entered into an agreement with the Airports Authority of India (AAI) and has cleared all the principal dues of the airport operator. The airline company gave this information on Tuesday. With this, SpiceJet will no longer have to operate under the ‘cash and carry’ model at airports operated by AAI.

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Rather, it will now follow the advance payment system for operating regular flights. Under the ‘cash and carry’ model, an airline has to pay various charges to AAI on a daily basis. SpiceJet said that now AAI will also issue its bank guarantee of Rs 50 crore. SpiceJet has been incurring losses for the last four consecutive years. The airline said SpiceJet has flown with the highest passenger load factor for a record seven years and has recorded the highest occupancy among Indian domestic airlines since April 2015. “The airline has the clear distinction of flying with Passenger Load Factor (PLF). More than 90% for a record 58 consecutive months,” the spokesperson said.

Airline had a net loss of Rs 316 crore, Rs 934 crore and Rs 998 crore in the financial years of 2018-19, 2019-20 and 2020-21 respectively. The airline had a net loss of Rs 1,248 crore in April-December, 2021. SpiceJet is yet to announce its quarterly results for January-March 2022. A financial appraisal of the airline in September 2021 found that SpiceJet was operating on “cash and carry” and approved vendors were not being paid on a regular basis, leading to shortage of spares and bar of Minimum Equipment Inventory (MEL). – was being called repeatedly. MEL is a list of certified equipment prior to flight. A certified aircraft maintenance engineer is permitted to issue an aircraft for flight when certain listed equipment is not available.

The Directorate General of Civil Aviation (DGCA) had on July 27 acted on its show-cause notice to SpiceJet and cut the airline’s operations to 50 percent for eight weeks of its current departures that were approved under the summer schedule. The move came a week after DGCA issued a warning notice to SpiceJet, saying the budget carrier failed to establish its services were safe, efficient, and reliable after at least nine SpiceJet flights between May 1 and July 6 witnessed “incidents” ranging from cracked windscreens to malfunctioning instruments.

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