The death knell for India’s Kingfisher Airlines sounded as lender banks took possession of the airline’s 25,850-sq-ft headquarters property in Mumbai on August 10. Carrying some $1 billion in outstanding debt, liquor tsar Vijay Mallya and his United Breweries Group have seen wholly owned Kingfisher accumulate $2.6 billion in losses since its launch in 2005. Most recently, it registered a loss of $188 million for the quarter running from April to June.
The withdrawal of Kingfisher Airlines’ domestic airport slots and international flying rights by India’s Ministry of Civil Aviation on February 25 could make a phased restart of the carrier even more challenging. Meanwhile, authorities have de-registered 13 of the 37 aircraft parked in India, but airports haven’t allowed lessors to claim their assets until Kingfisher pays pending dues totaling $72 million.
“[Kingfisher has] to give some guarantee [to pay], said Airports Authority of India chairman V.P. Agrawal. “Bank checks worth $21 million…bounced. A legal issue is going on.”
The air operator certificate of India’s Kingfisher Airlines officially expired at midnight on December 31. The cash-strapped airline suspended operations on Oct. 1, 2012, and has failed to fully pay pilots, mechanics, customer-service reps and creditors for some eight months.
Facing a high debt burden, unpaid bills, a depreciating rupee in its home country of India and rising fuel costs, Kingfisher Airlines saw its Air Operator Permit (AOP) expire on December 31 after the Director General of Civil Aviation (DGCA) found the carrier had failed to furnish no-objection certificates from service providers–including airports–in its restructuring plan. Now, the Airports Authority of India (AAI) has threatened to “evacuate” the assets of the airline from airports across the country.
Policy-making paralysis over much-needed reforms and liquidity concerns raised by the grounding of Kingfisher Airlines has deterred investors, vendors, lessors and suppliers from doing business in India’s air transport sector, according to delegates attending last month’s Asia-Pacific Airlines Association Assembly of Presidents in Kuala Lumpur. Association calculations show that average profits among Indian airlines amount to just $1 per passenger.
Striking pilots and engineers of India’s Kingfisher Airlines have accepted a three-month portion of their eight months of unpaid salaries and agreed to return to work, even as management struggles to get its suspended Scheduled Operator’s Permit reinstated. Still, civil aviation minister Ajit Singh warned that paying salaries alone would not guarantee that Kingfisher would fly again. “I think the Kingfisher problem is much bigger; even if they pay the salaries today, are they going to take off and fly? I don`t think so,” he said.
After failing to reach an agreement with striking engineers and pilots who have not been paid since March this year, India’s Kingfisher Airlines has effectively grounded itself until at least October 12 by locking out staff. Kingfisher’s management, led by owner Vijay Mallya, is trying to renegotiate some $2.49 billion in debt with creditors while it struggles with serious cash-flow problems, evidenced by $1.9 billion in losses for the first half of this year.
The western Indian state of Gujarat has what amounts to its first regional airline with the launch of Deccan Shuttles by G.R. Gopinath, who founded India’s first low-cost airline, Air Deccan, before selling it to Kingfisher Airlines. Scheduled operations started on August 27 using a pair of nine-seat Cessna 208B Grand Caravans. The turboprop singles ply the Ahmedabad-Surat-Bhavnagar and Ahmedabad-Kandla routes, marking the first-ever direct air service between provincial cities in this large state.
India’s Directorate General of Civil Aviation (DGCA) expects to complete its second safety audit of that nation’s airlines by next month. The audits began with a look at Kingfisher Airlines and Air India Express because of ongoing labor issues at those airlines. The DGCA expects the first of these reports to be released soon.
Concerns over the safety oversight of financially struggling Kingfisher Airlines continue, even as the fleet–once 64 aircraft strong–has now shrunk to six A320s and five ATR 72s. The fleet reduction, driven largely by non-payment of leases, comes as a portion of the company’s pilots took strike action on August 18 to protest more than six months of back wages owed them by Kingfisher.
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