SpiceJet's stock experienced a significant decline of nearly 7% on August 30, following the Directorate General of Civil Aviation's (DGCA) decision to place the airline under enhanced surveillance.

This move by the aviation regulator comes amid ongoing financial difficulties and operational challenges faced by the budget airline.

The stock, which is listed on the Bombay Stock Exchange (BSE), opened Friday's trading session with a 5.78% loss and continued to fall, reaching an intraday low of ₹62.01, marking a 6.37% decline.

The drop in share price was largely attributed to growing concerns over flight cancellations and the financial strain on the airline.

The DGCA's decision to increase oversight of SpiceJet follows a special audit conducted on the airline's engineering facilities on August 7 and 8.

The audit revealed several deficiencies, prompting the regulator to impose more stringent monitoring measures. These measures include increased spot checks and night surveillance to ensure the safety of SpiceJet's operations.

This is not the first time SpiceJet has been under the DGCA's enhanced surveillance. In 2023, the regulator had taken similar steps due to the airline's operational issues.

According to a DGCA statement, the decision to reinstate enhanced surveillance was made "in light of the past record and the special audit carried out in August 2024."

Adding to SpiceJet's woes, several of the airline's scheduled flights from Dubai were canceled on Thursday due to non-payment of dues to the Dubai airport.

This financial setback is compounded by a 20% drop in the company's consolidated net profit for the first quarter of the fiscal year ending June 2024, which stood at ₹158 crore, down from ₹198 crore in the same period the previous year.

Despite these challenges, analysts from the domestic brokerage JM Financial remain optimistic about the sector's prospects. They believe that capacity expansion and lower aviation turbine fuel (ATF) prices will boost earnings in the coming quarters.

The brokerage's August 29 report noted that ATF prices, a significant component of operating costs, have been declining in the second quarter of 2025 due to falling oil prices, which could result in lower costs and higher margins for airlines.