Economy

Domestic airfares soar 10-30% on disruption in Kingfisher service

Our Bureaus New Delhi | Updated on March 12, 2018 Published on February 20, 2012

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DGCA summons Kingfisher CEO; airline blames I-T Dept for attaching bank accounts





Domestic airfares have increased by 10-30 per cent in the last few days mainly on account of Kingfisher Airlines cancelling several of its flights connecting different parts of the country.

Travel agents across the country confirmed the development to Business Line.

A Bangalore-based travel agent said that with Kingfisher curtailing flights, fares on some of the popular sectors such as Bangalore-Delhi have almost doubled. For instance, a Bangalore-Delhi ticket, which was earlier available for about Rs 7,500, is now going at Rs 13,000-14,000.

A Mumbai-based travel agent said travellers booked on Kingfisher had to pay an additional Rs 2,000-3,000 for each ticket to complete their flight as they were forced to rebook at the last moment.

Worried at the disturbing situation, the Directorate-General of Civil Aviation has summoned Kingfisher's Chief Executive Officer, Mr Sanjay Aggarwal, for a meeting here on Tuesday.

It is widely expected that the airline will be told, in no uncertain terms, that it should stick to the schedule approved by the regulator. Kingfisher is also likely to be told of the various consequences of violating the rules, including the possibility of its operating licence being cancelled. The meeting has been called as no airline is allowed to cancel flights without informing the DGCA.

There is also said to be intense political pressure not to take stern action against the airline which is promoted by a sitting Member of Parliament.

Airline blames I-T Dept

The airline issued a statement on Monday saying about “about 15 per cent of its flights, operating consistently for the past three months, have been cancelled.”

The statement, however, was silent on the number of flights that have been cancelled.

On Monday, Kingfisher operations were in a “worse condition” than Sunday when the cash-strapped private sector airline cancelled 58 flights of the 135 flights it was to operate from the six metros, sources said.

The statement added that the prime reason for the current disruption in its flight schedule “is the sudden attachment” of Kingfisher's bank accounts by the Income-Tax Department.

“This has severely affected our ability to make operational payments, leading to the present curtailment,” the statement added.

What is compounding the airline's problem is that it is on cash and carry payment system at most airports around the country.

This means that the airline will have to make spot payments, be it for refuelling or payment of parking and navigation charges at airports. Generally, most airlines enjoy a credit facility that allows them to pay for these services at the end of a stipulated number of days.

But with Kingfisher defaulting on its earlier payment schedule, this facility is not available to it any longer. Kingfisher, for instance, owes Rs 255 crore to the state-owned operator Airports Authority of India as of January 15.

Seeks additional funding

The airline, which is facing a severe financial crisis, has approached a consortium of banks seeking additional funding.

Bankers say it will take at least a week for them to analyse the viability study on the airline put together by SBI CAP. The bankers, who attended a lenders' consortium meeting last week said, KFA promoter Mr Vijaya Mallya sounded confident about reviving his airline, banking on the proposed FDI in domestic airlines and direct import of Aircraft Turbine Fuel.

The airline is an NPA account with SBI, IDBI, and Bank of Baroda.

However, there are a few banks with whom its account is still standard. If the airline is not restructured by March-end, then it will become a bad asset with other banks also.

Meanwhile, there was a ray of hope for the airline late on Monday night.

While officials at the Kolkata airport said there were high chances of resumption of flights from Tuesday, market sources said that Kingfisher travel agents have been asked not to book flights till February 28.

According to Kolkata airport officials, flights from Kolkata to Dhaka are likely to be resumed from tomorrow while flights to Bagdogra, Aizawl and Bhubaneswar (ATR aircraft) are likely to be resumed from February 22. Flights to Delhi, Mumbai and Bangkok (operated with Airbus) are likely to re-start from February 29.

Kingfisher officials, however, were not available for comment.

(With inputs from Bangalore, Mumbai and Kolkata Bureaus)

ashphadnis@thehindu.co.in

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Published on February 20, 2012
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