DGCA (Directorate General of Civil Aviation), the aviation regulatory body of India on Saturday (October 20, 2012) has suspended the flying license of Vijay Mallya-directed Kingfisher Airlines (KFA). The suspension came in effect after Kingfisher Airlines failed to produce a concrete revival plan. This development has shocked and adversely affected about six thousand employees of KFA, who are already frustrated with non-payment of their salaries since last eight months. The suspension will be in effect until KFA produces to DGCA, an effective and reliable revival plan. This event has alarmed employees, shareholders, lenders as well as travellers.
KFA employees who haven’t been paid since March, are already on-strike since October 1. KFA facing cash-deficit, suspects its operations to freeze at least till November 6.
Suspension of Scheduled Operator Permit of KFA
Despite of DGCA warnings, KFA has been booking air-tickets for dates ahead of October 21, 2012 showing a warning in its website – All flights subject to regulatory approval. It’s now after suspension of aviation license that KFA has suspended any further bookings.
A spokesperson on behalf of Kingfisher Airlines said :
We are now immediately suspending all forward bookings till such time we resume operations. Our endeavour to re-start operations at the earliest and we assure you we are working towards achieving this.
We would like to clarify that this is not a cancellation but a temporary suspension which is valid only till such time that we submit a concrete and reliable revival plan to the satisfaction of the DGCA.
KFA after failing to submit a viable resumption plan for its flights, seek more time, which was rejected by DGCA. All the operations of KFA were set to freeze with the suspension of SOP (Scheduled Operator Permit) for indefinite period.
Ajit Singh (Minister of Civil Aviation of India) has warned the Airline to soon come up with a concrete revival plan otherwise its aviation license may be permanently cancelled. He said :
If they are not able to provide any concrete revival plans on how to restart operations and to pay their employees, then the DGCA (Directorate General of Civil Aviation) may cancel their license.
It should be noted that Sushmita Chakravarthy (45) who is wife of KFA employee Manas Chakravarthy, at her South Delhi residence had committed suicide on October 4, 2012, citing in her suicide note her frustration over deteriorating financial condition of her family due to non-payment of salary to her husband by KFA.
Effects of SuspensionJobs of 6000 KFA employees are on stake along with their salary dues of eight months. 17 banks who had lent a heavy amount of 7600 Crore to KFA are very concerned about recovering their money from the suffocating airlines.
The employees of KFA are now clueless about their jobs and their pending salaries.
SBI (State Bank of India) is the lead lender to KFA and had lent the Airlines 1300 Crore alone. S. Vishwanathan, Managing director (Mid-Corporates) of SBI said :
We are concerned as we have no control on these developments. We were prepared for all these. The last thing we bankers want is a complete shut-down of the airline, as we want the airline to resume operations and repay our money. Recovery of loans through sale of its assets is the last option.
According to business experts, the exit of KFA from Indian Aviation Market will cause other airlines of increase already high air fares. With the festive season going on in India, there is huge demand of air-tickets. However, rival airlines has rejected the reports of possible price hikes citing the reasons that KFA was running restricted and scaled down operations and there is now enough capacity.
King of Good Times to King of Bad TimesKFA was launched by liquor-baron Vijay Mallya on May 9, 2005 – two days after his son’s (Siddharth Mallya) 18th birthday. The airline was in pace with the brand-punchline of Kingfisher – King of Good Times. KFA flights were fun-packed with glamorous models and air-hostesses around and five-start hospitality. Vijay Mallya was featured in video announcements on board telling that each passenger was like a personal guest for him.
The current scenario of KFA is that it has only 10 operational aircraft. A year ago this number was 66 and KFA was India’s second most visited airlines.