Beleaguered Kingfisher Airlines today virtually blamed the Income Tax authorities for the large-scale flight disruptions, saying freezing of its bank accounts by them had “severely affected” payment schedules that had led to the curtailment in its services.
“The prime reason for the current disruption in our flight schedules is the sudden attachment of our bank accounts by the I-T department. This has severely affected our ability to make operational payments leading to the present curtailment,” an airline spokesperson said in a statement.
It said the employees’ “salaries can be paid and the grounded aircraft can be recovered quicker once the bank accounts are unfrozen and the schedule restored on priority.”
The spokesperson said the company was in talks with the I-T authorities “to agree (on) a payment plan and get the bank accounts unfrozen at the earliest. We are appealing to them to see reason that inconvenience to the travelling public is not in anybody’s interests.”
Kingfisher’s CEO Sanjay Agarwal and top officials have been summoned by the DGCA to appear before them tomorrow to explain the large-scale disruptions in the operations of the cash-strapped carrier.
Over 30 flights were cancelled today, including those to Bangkok, Singapore, Kathmandu and Dhaka, leaving hundreds of passengers stranded at various airports across the country.
About one-third of its flights were cancelled in six metros yesterday and similar disruption and delays were witnessed in Tier-II and III cities.
Ruling out any bailout to the airline, Civil Aviation Minister Ajit Singh said the government had recently “seized their bank accounts also. So our first concern is that flights which are ongoing, passenger safety should not be compromised and then let us see what reply they give. DGCA is inquiring into it.”
Kingfisher, which suffered a loss of Rs 1,027 crore in 2010-11 and has a debt of Rs 7,057.08 crore, claimed only about 15 per cent of its flights, operating for the past three months, have been cancelled. The airline posted a Rs 444 crore loss in third quarter this fiscal.
Today’s cancellations included 14 from Mumbai, seven from Kolkata and six from Delhi.
“We have done and are doing our best to inform guests in advance of cancellations and clubbing and to re-book them on other carriers”, besides offering them full refund, the spokesperson said.
He said the airline was in touch with travel agencies “to keep them abreast of the disruptions so that they too can, in turn, ensure that guests contacting them /booking via them are kept updated of any changes.”
Regarding negotiations with its prime lenders over the weekend in Mumbai, he merely said, “We have had a constructive meeting with our bank consortium last week” and, added that the airline has “not approached the government for any bailout.”
The ailing carrier, which is to file a report to the DGCA on the flight cancellations since Friday night along with the reasons, said it has been in touch with the aviation regulator and has kept it informed of the disruptions.
“We will appear before the DGCA tomorrow and submit all details they want and also a plan to restore the full schedule,” the spokesperson said.
He claimed there were “absolutely no safety issues with the aircraft that are operating” and the airline had “adequate numbers of flight crew and cabin crew to operate our schedule of flights.”
The spokesperson of the ailing carrier said, “certain positive decisions” taken at a recent meeting of a Group of Ministers “will benefit the (airline) industry and also Kingfisher Airlines”.
The GoM had a few weeks ago decided to allow direct jet fuel imports by Indian airlines and permit foreign carriers to pick up stake in them. Kingfisher promoter Vijay Mallya had been lobbying hard with the government on both these issues.
Meanwhile, a day ahead of Kingfisher top-brass meeting it, the DGCA was in the process of gathering information from all centres across the country on the cancellation and major delays of Kingfisher flights.
Based on this information as well as what the airline submits to it, the aviation regulator would decide on what action to take under the rules.
Under Rule 140(A) of the Aircraft Rules, 1937, operators require to have prior approval of DGCA to curtail their flight schedules. The violation of the rules can also amount to cancellation of the flight permit of an airline, as an extreme measure.
DGCA has also directed all other airlines to accommodate Kingfisher passengers stranded due to these cancellations without enhancing the fares.
Banks to decide soon on Kingfisher request for working capital
A consortium of lenders led by State Bank of India (SBI) will soon take a call on providing the working capital to cash-strapped Kingfisher Airlines.
According to sources, the airline has requested the consortium for a working capital support of Rs 200-300 crore and individual banks are expected to take a call on this in the next few days.
Kingfisher Airlines in a statement on Saturday had said, “We have had a good meeting with our consortium of banks who 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,” it said.
A 13-bank consortium led by State Bank of India (SBI) had earlier said that it would not further lend to Kingfisher till UB Group infuses equity.
In another development, tax authorities have attached bank accounts of the airlines.
“However, this has happened in the past not just to us but also to Air India. We have resolved issues before and will do so again,” the Vijay Mallya-promoted airline had said.
One of the consortium lenders Oriental Bank of Commerce Executive Director S C Sinha said, “Banks are considering the proposals of Kingfisher as per the decision taken in the consortium meeting. Each bank board has to take a decision (on grant of working capital).”
He, however, declined to give the quantum of the working capital requirement of the the airline citing confidentiality issue.
Meanwhile, air services of cash-strapped Kingfisher Airlines were badly hit yesterday with almost half of its flights from major metros cancelled or delayed, causing hardship to passengers and prompting aviation regulator DGCA to contemplate action against the beleaguered carrier.
A big number of flights, including 16 from Mumbai and seven from Kolkata, four from Delhi were cancelled. These included destination flights to Singapore, Bangkok, Dhaka and Kathmandu.
Following the cancellation of flights, the Directorate General of Civil Aviation (DGCA) had asked senior officials of the airline, including CEO Sanjay Aggarwal, to appear before it tomorrow to explain the cancellations.
More than 20 flights were cancelled today. About 80 flights of the carrier from six metro cities did not operate yesterday leaving hundreds of passengers stranded.
The ailing carrier had till late last evening failed to file a report on the number of flights it had cancelled since Friday night to the DGCA.