Stopping Further Bookings Not The Answer, SpiceJet Should Be Penalised For Last- minute Cancellations

December 03, 2014

SpiceJet continues mass flight cancellations but various arms of the Government seem to be acting as mute spectators to passenger woes. Though sources told Firstbiz that aviation regulator DGCA has sought details from SpiceJet about cancellations and may take some action soon, one wonders why the regulator or the ministry of civil aviation have been watching from the sidelines as thousands of pre-booked passengers suffer due to sudden flight cancellations.

These cancellations push passengers to book on other airlines at exorbitant rates and many times they are left without any alternatives. Our sources tell us of SpiceJet flying 70 less daily flights from its summer peak of 345 whereas the airline says it has been cancelling 50 flights a day. Either way, thousands of passengers are being inconvenienced.

Take the case of Ritu Chadha, who was booked on a SpiceJet Mumbai-Kolkata flight for this evening. Her daughter Sunaniaa Chadha, who works at Firstpost, says she had booked the ticket 14 days in advance for Rs 7,000. "But we got an SMS that the flight was cancelled on Sunday. Then I began a twitter dialogue with SpiceJet which lead them to re-book my mother on a flight leaving Mumbai this morning. But another message arrived on Monday night which informed us that this flight was cancelled too. We were left with no option but to book an Air India flight at Rs 9000".

Sunainaa said SpiceJet has promised them to refund the ticket money but she does not know when that will happen.
Sources said that the DGCA is thinking about asking SpiceJet to stop taking fresh bookings but no decision has been taken as yet. A story in this morning's Asian Age also refers to this sort of thinking in the DGCA.

Sources had earlier said that the DGCA has asked SpiceJet about number of flights cancelled and mechanism in place to refund passengers of these flights. The airline is expected to revert with replies today. Sources had also pointed out yesterday that the airline's fleet has shrunk to about 20 Boeing aircraft and it is planning to shut down operations to several stations in the country and abroad as fleet shrinks. SpiceJet did not respond to questions on stations shutting down, merely saying it has a fleet of 31 Boeing aircraft of which 24 are operational.

Should SpiceJet be restrained from taking fresh bookings? One aviation industry veteran points out that this could prove to be the proverbial nail in the coffin since this would mean the airline cannot operate flights. It is possible that DGCA may restrain the airline from taking long term bookings only. Even that may harm the airline more than helping passengers.

Why not ask SpiceJet to instead publish a fresh schedule of its flights and provide a daily update to DGCA and to passengers about which flights are being cancelled? Stopping bookings could jeopardise the process by which the airline may be trying to bring in investors. The airline should instead be penalised for last-minute cancellations and should be directed to inform all passengers in advance about any delays/cancellations.

Then, its compensation mechanism should also be scrutinised. Sunainaa pointed out that the information on cancellations arrives via a text message and call centre numbers are unavailable. The regulator should check how many aggrieved passengers have been refunded and within how many days. The airline should also be asked to make all efforts to re-book passengers on later flights on its own network or on other airlines.

An official in the ministry said it was high time airlines were restrained from "predatory pricing". SpiceJet was at the forefront of deep discounts all of Q2 and in October, with competitors alleging it was pricing tickets below cost. Every LCC followed suit to remain competitive anyway. But who is going to stop airlines from charging below cost price unless the regulator steps in? Earlier, the DGCA had framed price buckets - which defined the lowest and highest ticket price on each sector - and also verbally warned airlines from offering ridiculously low priced tickets.

One section feels it is not the job of the regulator to govern ticket pricing, the other feels monitoring discounts is better than allowing an airline to die a slow death. As a debate over yet another airline slowly going down rages, perhaps the regulator and the ministry need to take some tough calls. Of course, if SpiceJet does manage to get recapitalised - it has been in talks with investors - then it will work to everyone's relief. Global aviation consultancy CAPA estimates the airline needs Rs 1500 crore immediately.

(first biz)