Shares of SpiceJet (NSE- 3.58%) continued to fall on Thursday, falling another 5% after the DGCA extended the airline operator’s flight cap or grounding until October 29. As a blow to budget airlines, the Director-General of Civil Aviation (DGCA) said it would extend the grounding of domestic Spice Airlines by 50% until October 29.

The aviation regulator said on September 21 that it was expanding restrictions on budget airlines as a cautionary measure. At the same time, SpiceJet will be subject to enhanced oversight by the DGCA. After the update, SpiceJet shares plunged 5% to Rs 39.80 on Thursday before recovering to Rs 40.2 by 9:50 am. On Wednesday, the share price was closed at Rs 41.85.

Regulators on July 27 asked SpiceJet to reduce its total number of flights by 50% within eight weeks of the airline’s multiple safety incidents.

In a new order on Wednesday, the regulator said that if SpiceJet wants to operate more than 50% of its fleet, it must demonstrate to the DGCA that it has sufficient technical support and financial resources to increase its capacity.
The announcement comes a day after the Gurgaon-based low-cost airline sent 80 pilots on unpaid leave for three months to save costs.

Shares of SpiceJet have long been on a downward spiral. The stock has fallen about 12% in the last month and is down 42% in 2022.

While the airline has applied for 4,192 weekly flights for the summer, or about 600 a day, industry sources said the airline operated fewer than 300 flights last month.

The DGCA issued a Notice of Cause to SpiceJet in the first week of July for failing to establish a safe, efficient and reliable service following eight monthly incidents.