India’s aviation safety regulator ordered SpiceJet to continue operating at 50% capacity until October 29, in a move that could hurt the airline’s finances further.
The news came eight weeks after the Directorate General of Civil Aviation (DGCA) ordered the budget carrier to limit its departures to 50% citing multiple safety-related incidents.
DGCA cited an "appreciable reduction" in such incidents, but added it took the latest decision "as a matter of abundant caution", according to the order issued on Wednesday.
Aviation experts said the move showed the worst might not be over yet for the airline.
"The fact that DGCA has extended the 50% limit highlights that the airline is still not out of the woods," said Rohit Tomar, Managing Partner at Caladrius Aero Consulting LLP.
On Wednesday, the regulator said that during this period, the airline will have to demonstrate that "it has sufficient technical support and financial resource(s) to safely and efficiently undertake enhanced capacity" if it were to increase its operations beyond 50%.
Tomar said that the airline was still not financially stable to address the concerns.
"SpiceJet needs equity infusion to the tune of about $100 mn to be able to recover," he added.
Besides being in the news for several safety-related incidents, the airline has also been going through a financial crisis. In FY22, the airline had reported a loss of Rs 1,725.47 crore, as against Rs 998 crore of loss in FY21. Earlier this week, it asked 80 of its pilots to go on a three-month leave without pay. It said the move was a temporary one to cut costs.
SpiceJet did not respond to DH's requests seeking comment.