Kingfisher Airlines cancels flights as bank accounts frozen again

Vijay Mallya-run Kingfisher Airlines (KFA) has plunged into a fresh crisis with the tax authorities freezing the company's bank accounts for failing to pay up its dues which has forced the debt-ridden airline to cancel as many as 32 flights.

With the grounding of several Kingfisher planes, airfares have shot up as rival airlines are getting more passengers.

Kingfisher owes around Rs 190 crore to Income Tax and Service Tax authorities towards non-remittance of Tax Deducted at Source (TDS) from employees' salaries and service tax dues.


"We would like to categorically state that neither we have shut any stations nor have any intention of doing so. There have been flight disruptions, which will continue for four days, due to unexpected events, including bird hits, which rendered aircraft out of service. We, therefore, could operate only 208 daily flights (from 240 flights a day)," Mirpuri added. He said that the airline will operate the full schedule within the next four days.

POLICY CHANGE TO HELP CARRIERS IN TROUBLE The government has constituted a working group headed by civil aviation secretary Nasim Zaidi that would examine problems of the aviation industry and subsequently work out on a policy package to help ailing Indian airlines besides the state-run carrier, Air India. The civil aviation ministry had recently asked all scheduled airlines, including profit-making IndiGo, to submit data on their financial situation, official sources said. About seven scheduled carriers, including Air India, submitted the required information last week. Besides IndiGo, other carriers which submitted the required information are Jet Airways, JetLite, Kingfisher, SpiceJet and GoAir. The information sought by the ministry relates to their overall financial situation, the extent of debt with financial institutions and their working capital requirements. The ministry will hold consultations with the carriers along with the Department of Financial Services and Banks, which operates under the Finance Ministry. The discussions would aim at preparing an overall policy prescription for the industry as the government cannot provide any direct financial dole to bail out the private airlines, the sources added.

Meanwhile, the Directorate General of Civil Aviation has initiated an inquiry into the sudden cancellations. KFA, which has been urging banks to provide additional funds for a turnaround, is working to arrest losses estimated to be around Rs 5 crore a day going by Q3 results.

But banks are asking for more equity infusion by promoters.

"We have had a good meeting with our consortium of banks, which have accepted, in principle, the viability study prepared by SBI Capital markets and independent consultants. Our request for additional working capital has been acknowledged by the consortium and is subject to individual bank approvals."

As KFA cancelled more flights, airfares in the affected sectors have gone up by 20 per cent in this lean season. Had it been in December, the impact could have been much more.

"On an average, fares have seen a rise of 20 per cent due to capacity reduction. Other airlines will fill their seats in the highest slab fare causing hardship for passengers," said Anup Kanuga, director, Bhatija Travels.

"Kingfisher is pulling out of loss making routes. Kolkata and Chennai are loss making sectors for all airlines and it does not make sense to operate there. Kingfisher will curtail its operations," said Lalit Sheth, CMD, Raj Travel World.

Courtesy: Mail Today