1. Kingfisher Airlines caused Rs 290 cr loss to AAI, says CAG

Kingfisher Airlines caused Rs 290 cr loss to AAI, says CAG

Airports Authority of India's failure to take timely action against now defunct Kingfisher Airlines for non-payment of dues and allowing it to operate on credit basis led to losses worth Rs 290 crore, CAG has said.

By: | Updated: July 30, 2015 10:38 PM
Kingfisher airlines

Bogged down by mounting debt and operational issues, the Vijay Mallya-owned Kingfisher was grounded in 2012 after aviation regulator DGCA cancelled its licence. (Reuters)

Airports Authority of India’s failure to take timely action against now defunct Kingfisher Airlines for non-payment of dues and allowing it to operate on credit basis led to losses worth Rs 290 crore, CAG has said.

The Comptroller and Auditor General (CAG) has also said that the Civil Aviation Ministry diluted its stand by allowing Kingfisher Airlines (KFA) to continue operations despite the carrier being a “wilful defaulter”.

Bogged down by mounting debt and operational issues, the Vijay Mallya-owned KFA was grounded in 2012 after aviation regulator DGCA cancelled its licence.

In a report tabled in Rajya Sabha today, CAG said that loss of over Rs 289 crore happened due to AAI’s “failure in taking timely action as per approved credit policy”.

Despite being aware that KFA was a wilful defaulter, the Ministry and AAI allowed the airline to continue operations “even beyond withdrawal of credit facility and did not take timely action to recover the mounting dues”, the report said.

In its reply given in October 2014, AAI informed the apex auditor that it had exercised all measures along with invoking legal aspects to realise the dues.

AAI also said that the Ministry was informed about the process of liquidation of outstanding dues from time to time.

However, CAG observed that the reply does not “absolve” the AAI of its failure in taking action as per provisions of credit policy and allowing KFA to continue its operations even after withdrawal of the credit facility.

Noting that AAI also did not take timely action as advised by the Ministry, the government auditor said it resulted in extending undue favour to KFA “which resulted in loss of revenue of Rs 172.69 crore apart from loss of interest of Rs 117.03 crore (up to February 2014)”.

Together, the loss amounts to Rs 289.72 crore.

Further, the Ministry failed to enforce its directives and “diluted its stand by allowing KFA to continue operations”, the report noted.

CAG also said that KFA continuously defaulted in making timely payments and the amount of outstanding dues was more than the available security deposit during the majority period of the carrier’s operations.

AAI had written off KFA dues worth Rs 172.69 crore during 2013-14.

The licence of the airline was cancelled by the DGCA (Directorate General of Civil Aviation) in December, 2012.

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