India - Tough going

SpiceJet Flights Disrupted by Cash Woes

After Cancellations, Indian Airline Comes Up With Money for Fuel and Returns to Service

 An aircraft from low-cost Indian carrier SpiceJet lands at the domestic airport in Mumbai. Sajjad Hussain/Agence France-Presse/Getty Images         By               Sean McLain                   Updated Dec. 17, 2014 8:36 a.m. ET     NEW DELHI— SpiceJet Ltd. canceled flights Wednesday morning as the cash-strapped budget airline struggled to pay for fuel, triggering a selloff of the Indian company’s shares and further damaging its reputation. India’s second-largest low-cost carrier has been slashing the number of flights it operates as it shoulders widening losses that stem from stiff competition in the country’s high-cost aviation market. Most other Indian airlines are contending with similar problems. SpiceJet resumed flights by midafternoon but only after it came up with the cash to pay for fuel, an oil-company executive said. “Flights scheduled to depart on or after 4 p.m. [Wednesday] will operate. We apologize again for the disruptions,” said Sanjiv Kapoor, SpiceJet’s chief operating officer, on his Twitter account.Fuel companies initially stopped delivering to SpiceJet on Wednesday morning because it owes them 140 million rupees ($2.2 million), said a SpiceJet executive. The companies had removed SpiceJet’s credit line in the latest contract renewals, concerned about the company’s ability to pay them.SpiceJet is only the latest Indian airline to run into financial turbulence. Since the industry was opened to private companies in the 1990s, several airlines have folded or were absorbed as owners gave up on trying to earn money in the promising but punishing Indian market. While millions of Indians have been able to afford to take a plane for the first time in recent years, analysts say high fuel prices, a falling rupee and some of the highest airport fees and other taxes in the world make it tough for the airlines to record profits.