After oil companies stopped supplies of jet fuel to low-cost Indian airline SpiceJet, the financially beleaguered air carrier grounded all flights on Wednesday.
The Associated Press reported a Delhi airport official as saying no SpiceJet flights had taken off Wednesday and passengers were making arrangements to shift to other airlines.
India's civil aviation ministry Tuesday asked state-owned oil companies and airport operators to extend credit to SpiceJet for 15 days to prevent the airline from shutting down. But oil marketing companies are refusing to supply jet fuel to cash-strapped carrier.
The aviation ministry also said it would ask Indian banks to extend loans of around $95 million to the airline to help keep it afloat.
Like many Indian airlines, SpiceJet has been hit by high fuel costs and a weak rupee. Its share price tumbled more than 5 percent on Wednesday.
The airline has liabilities of about $317 million, including money it owes to the oil companies and airport authorities in India.
On Tuesday evening, passengers at Mumbai airport waited in long lines to change to other airlines after many SpiceJet flights were canceled or delayed.
The ministry announced a series of steps to "to tide over the crisis and to keep SpiceJet from shutting-down, as it would be a major set-back to the Indian civil aviation sector."
Among the measures, the ministry recommended that the civil aviation regulator allow SpiceJet to take bookings for flights between now and March 31 next year even though its ability to operate is in doubt.
The ministry's steps to help bail out SpiceJet came with the condition that its major shareholder Sun Group, led by billionaire media baron Kalanithi Maran, gives a commitment to inject more money into the airline.
The civil aviation minister told Parliament this week that India's aviation regulator had found that all private Indian airlines were under financial stress.
Kingfisher Airlines, once hailed as India's best private airline, has been grounded since late 2012, unable to pay creditors and employees.
Six Indian carriers, including SpiceJet and Kingfisher Airlines, jointly owe around $935 million to Airports Authority of India and three state-run oil companies, junior minister for civil aviation Mahesh Sharma told parliament.
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