Kingfisher cuts down daily flights from 400 to 175

Written by fe Bureau | New Delhi | Updated: Feb 24 2012, 09:22am hrs
As Kingfisher Airlines funding woes refuse to abate, the carriers plans to join the 'oneworld' alliance appear to have hit a huge roadblock. The global airlines alliance has already put the entry of the private airline on hold due to poor finances.

Industry sources said that, now, with the continuing mess, it is very unlikely that the carrier would make it to 'oneworld' for a long time to come. It will take a lot of time before the airline resolves its financial issues. It has losses of over R7,000 crore. Bankers are yet to agree on supporting it. Unless all that is resolved, oneworld will not happen," a source said.

Kingfisher has been too keen to be a part of oneworld that has 12 members and 20 affiliate airlines like British Airways, Cathay Pacific, American Airlines and Finnair. The carrier was supposed to join the alliance on February 10. However, on February 4, oneworld chief executive officer Bruce Ashby said that "it has become increasingly clear recently that the airline needs more time to resolve the financial issues it is confronting before it can be welcomed into oneworld."

The carrier has troubles with the International Air Transport Association (IATA) also. The Geneva-based IATA clearing house (ICH) had suspended the airline due to non-payment of dues to other members. According to a source, the company has "managed to pay the dues with IATA clearing house and has been reinstated in the network."

The problem has now mounted for the carrier that has been on a flight-cancellation spree for the last six days. The carrier on Thursday started operating as per its new schedule, which has brought down daily flights to 175 from over 400 earlier.

The airline's effort to convince the bankers has also not borne fruit. The banking official said that the consortium of 16 banks has refused to offer any fresh loans to the cash-strapped airline. The State Bank of India (SBI) has denied reports that it has agreed to provide R1,650 crore to the airline.

The aviation ministry maintained its stand on 'not playing any role in bailing out the airline. "If the banks find it good business, they will loan their money (to Kingfisher). .... At the same time, the government is not going to ask banks to loan money to any private industry. Its for the banks to decide. They will have to decide on the basis of whether they will get it back or not," Ajit Singh, civil aviation minister, said.

The directorate general of civil aviation (DGCA) is in the process of examining the airworthiness of Kingfisher's 28 operational aircraft, the number of crew and the number of flights to the Northeast.

The carrier has sent its second reply to income-tax authorities as well, which have already made it clear that they will not lift the freeze on airline's bank accounts, unless the carrier offers bank guarantees. "In their reply, they have said that they will pay the dues in installment. However, we can not accept it," the official said on the condition of anonymity. The carrier also owes R40 crore to the Central Board of Direct Taxes as indirect taxes.