SpiceJet Stands To Gain As 440 Jet Airways Slots Are Up For Grabs
SpiceJet Ltd. could be the biggest beneficiary as India decides to prefer airlines with extra capacity to allot time slots vacated by grounded Jet Airways Ltd. instead of following the norms that call for preference to new entrants.
These guidelines are for normal circumstances and “we are in an unprecedented situation, so the immediate need is addition of capacity”, Pradeep Singh Kharola, aviation secretary, told reporters in New Delhi today. Cash-starved Jet Airways’ decision to halt operations for now vacated 440 time slots: 280 in Mumbai and 160 in New Delhi, he said. The slots grant time for flights to land and take off at an airport.
A committee comprising airport operators and Directorate General of Civil Aviation will allocate these slots for three months, Kharola said, adding that the Civil Aviation Ministry will monitor the situation and it will be done in a “fair and equitable” manner.
Ajay Singh-led SpiceJet stands the best chance of getting new slots at India’s two busiest airports as it informed exchanges that the airline will add 27 aircraft in the next 10 days. The carrier is also best suited for adding Jet Airways’ planes grounded by lessors as it also has a Boeing fleet. In fact, a senior official at DGCA had earlier told BloombergQuint that SpiceJet was likely to add about a dozen of Jet Airways planes. And it would be able to hire Jet Airways’ crew trained for Boeing planes.
SpiceJet is in the process to induct six Boeing 737-800 NG aircraft on dry lease, in addition to 16 B737s and five Q400s, according to exchange filings. The current fleet of 48 Boeing 737s, 27 Bombardier Q400s and B737 freighter.
Meanwhile, Kharola said 75 Jet Airways planes were grounded in the last five months and the industry added 58 new aircraft during the period.
Rules Prefer New Entrants
The DGCA and International Air Transport Association regulations grant preference to new entrants if any new slots are available at capacity-constrained airports. In India, the new entrants are Tata Group’s Vistara and AirAsia India.
Vistara is said to be preparing for international flights after becoming eligible to fly overseas. The Tata-SIA joint venture received less than 10 slots from the airports operator, including five between Mumbai and Bengaluru, in the last one week. The future of these slot allocations are still not clear.
Emailed queries to both the airlines remained unanswered.
Earlier this week, airport operators at top metros had allocated slots vacated by Jet Airways to other airlines, a senior airline official told BloombergQuint on the condition of anonymity.
According to existing guidelines, in the event the airline undergoes bankruptcy or similar proceedings, the slots may be reserved for a period of one month pending reinstatement of the airline. But in case there is no legal protection linked to bankruptcy then the airport operator should reallocate the slots, according to DGCA’s slot allocation guidelines.
How Slots Are Granted
Time slots can only be granted at capacity-constrained—or Level 3—airports. According to IATA, there are four such airports in India: Delhi, Mumbai, Kolkata and Chennai. Kharola, however, said the Kolkata and Chennai are not capacity-constrained.
According to the DGCA guidelines for Level 3 airports:
- The airport operators should assign the slots to the airlines in an equitable manner in consultation with the Airports Authority of India.
- The regulations allow for grandfathering of the slots—granting preference to the incumbents that use them for 80 percent of the time.
- After allocation of historic slots, the remaining slots—like the ones vacated by Jet Airways—are put in a pool. Half of these are allocated to the new entrants and the rest to other airlines.
- The operator can allot historical slots on an ad hoc basis if they are vacated temporarily but these will revert to the airline once it resumes operations.
For claiming grandfathering of slots, according to IATA regulations, an airline should have at least five slots allocated for the same or approximately same time on the same day of the week, distributed regularly in the same season. Which means, the older the airline, the more preference it gets on slots. The very reason why Jet Airways had access to these prime-time slots.