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SpiceJet defaults on daily payments to AAI

Forum Gandhi Mumbai | Updated on August 04, 2021

The AAI is likely to take a decision by the end of this week on whether to allow the airline to operate   -  PTI

The low-cost carrier has been on cash and carry mode for the past one year

SpiceJet has defaulted on cash and carry payments to the Airports Authority of India (AAI) for at least four days.

Airlines usually pay monthly charges to airport operators. Under the cash and carry mode, carriers have to make payments on a daily basis to avail themselves of airport services for their flights.

Two people told BusinessLine that AAI hadn’t received the daily landing fee from SpiceJet for the past four days. The low-cost carrier has been put on cash and carry for the past one year because it could not pay the monthly charges. Since then it was supposed to pay a daily fee to operate at AAI airports.

One of the sources said the AAI is likely to take a decision by the end of this week on whether to allow the airline to operate.

Bank guarantee

Meanwhile, in the SpiceJet versus AAI matter in the Delhi High Court, the debt-strapped airline has been asked to cough up a a sum of ₹20 crore to avoid encashment of its bank guarantees with the airports regulator.

In October 2020, the company had dragged the airports authority to the Delhi High Court after the latter had threatened to encash the bank guarantees due to non-payment. In the said matter, SpiceJet has been given multiple leeways, yet it hasn’t been able to pay the money.

AAI’s credit policy states that if the total dues of an airline are above 75 per cent of the bank guarantees provided by the airline, AAI can encash it.

Earlier this month, the single Bench judge of the Delhi HC had asked SpiceJet to pay ₹20 crore to avoid the said encashment.

The no-frills carrier owes ₹147 crore as principal amount and ₹78 crore as interest. AAI has a bank guarantee of only approximately ₹155 crore.

Meanwhile, SpiceJet’s board has approved raising ₹2,500 crore to fund its working capital requirements. The airline recently received ₹127 crore under the emergency credit line guarantee scheme (ECGLS) scheme of the government.

SpiceJet did not respond to BusinessLine’s query.

Published on August 04, 2021

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