New Delhi, February 21
The civil aviation regulator has given Kingfisher Airlines a day to come up with a revised schedule for aircraft that the carrier is still operating. The DGCA also ordered a safety surveillance of the debt-ridden airline in view of mass exodus of staff, including senior pilots, and more than 50 per cent of fleet on ground.

Though he ruled out any punitive action at this point of time, Directorate General of Civil Aviation (DGCA) EK Bharat Bhushan said he was not satisfied with the crisis-hit airline’s reply, offered by CEO Sanjay Aggarwal, on flight cancellations. The company blamed the Income Tax department for seizing its accounts and leading to large-scale cancellations.

The special safety surveillance on Kingfisher follows concerns about aircraft safety or maintenance raised by aviation experts keeping in mind en masse resignation of pilots in the past six months, with more than 30 A-320 commanders leaving as recently as last week, and several aircraft sitting on ground.

The airline is currently operating 28 of its 64 aircraft, Bhushan confirmed, adding that the cancellation of flights was not due to shortage of pilots. He also said that passengers need not be worried as Kingfisher had told him that it had enough cabin crew and pilots to manage the flights.

The airline CEO also tried hard to quash speculations about the future of the airline, saying that the airline had sufficient number of senior pilots and other staff. Hoping that flights schedule would be restored in a week’s time, Aggarwal asserted “most of the flights cancelled in the past few days will be in action in next four to five days”.

The DGCA has asked the airlines not to shut down its operations in Kolkata as the Northeast was an important region. Sources said that shutting down of Kolkata operations was a part of the airline’s strategy to cut down losses from flying on unprofitable routes. Kingfisher is likely to resume operations in Kolkata by tomorrow, sources said.

The DGCA also told Aggarwal to ensure that the staff was paid their salaries at the earliest. Bhushan said the Kingfisher CEO assured that the salaries would be paid fully by March. He, however, dismissed concerns over increase in airfares due to predatory pricing by rival airlines, saying that all fares were within the prescribed “buckets”. 

New Delhi, February 21
Vijay Mallya does not seem to be a in a hurry to leverage his other businesses like liquor to infuse funds into the cash-starved Kingfisher Airlines and seems to be counting on the fact that sooner or later, the chaos in the high-profile aviation sector and outcry from the harried passengers will get the airline some concessions from the banks and the government.

The Kingfisher stock, which had plunged almost 20 per cent in today’s trade, recovered at the end of the trading session following reports that the consortium of banks for the airline had agreed to lend close to Rs 1,000 crore so that it could continue operations. Stocks of the two other Mallya companies, UB Breweries Holdings and United Spirits, fell 8 per cent and 2 per cent respectively on concerns that the Kingfisher problems would also become a strain on their finances.

The last few days have left Kingfisher on the brink of a collapse with several flights being cancelled, passengers and the regulator, the DGCA, not being informed and the chaos at the airports. Kingfisher has blamed the Income Tax Department for freezing its bank accounts due to non-payment of TDS for the cancellations and employees not getting salaries. But it seems the airline seems to be defaulting everywhere. While Mallya has tendered apologies for the inconvenience, he has done precious little apart from appealing to the banks, IT department, DGCA and government for assistance.

The banking sector has a more than Rs 7,000 crore exposure to Kingfisher and it has become a bad loan. In the discussions with Kingfisher, banks have told the promoters that there needs to be an infusion of equity for them to be able to lend more and as it is the viability of the airline is in doubt. Mallya has not brought in equity but is said to be talking to some investors. The government on its part, with many airlines in financial problems has allowed direct ATF imports and is working on allowing FDI into airlines.

Kingfisher has thrown up its hands in this crisis and has probably figured that it will not imperil its other companies. If in the process, there is a huge outcry then the banks and government may have to finally step in. The government has rightly said that a bailout cannot be provided for a private airline and it is the banks call to decide on extending more loans. The government is already facing a huge revenue deficit and PSU banks are reeling under a mounting NPA burden.