"Closing down is not an option. It will not happen. Government does not want it to happen. It is not in national interest," Mallya said on Monday, in his first public reaction to the latest crisis to hit the cash-strapped airline. "Why should we give up as long as we get help? Help is not bailout. We have asked banks to consider our proposal to provide more working capital."
Asked about sudden disruptions in Kingfisher flights, Mallya said the airline's bank accounts were frozen "very suddenly" by Income Tax authorities over non-payment of tax dues. "I don't deny we have taxes due.... The bottomline is we requested for time to pay these dues." On why the airline did not inform the Directorate General of Civil Aviation (DGCA) about flight cancellations, he said, "If your bank account is frozen suddenly, obviously you don't have advance notice by which to notify DGCA."
The DGCA summoned the airline's CEO, Sanjay Aggarwal, on Tuesday to explain the flight disruptions, which began on Saturday. Since this is the second such large-scale disruption in four months, the airline is going to be warned against such moves in the future. The civil aviation regulator is also going to ask the airline how many slots (flights) it is actually operating after the latest curtailment. Last November, the regulator had found that Kingfisher was utilising 269 of its daily 418 domestic departure slots. The unutilised slots were, thereafter, freed up for other airlines. A similar exercise may be repeated this time.
Still, any extreme step like cancellation of licence is unlikely for now as the government feels closure of a big airline like Kingfisher could have wider ramifications. Indicating this, aviation minister Ajit Singh told reporters: "Ensuring safety of passengers in whatever planes (of Kingfisher) are flying is our primary concern. We do not want to cancel more flights and hope to see Kingfisher and all other financially struggling carriers recover."
The minister ruled out any bailout on the lines of the equity infusion into state-owned Air India. "Mallya has to find money to save his airline. Government can't go around asking banks to lend money to them. We have taken certain steps like allowing direct import of jet fuel. On that basis airlines can make plans and if banks are satisfied, they will give money under RBI norms," said Singh.
In the meantime, flyers booked on the private carrier continued to suffer. About 60 Kingfisher flights were cancelled on Monday, of which 16-that included sectors such as Lucknow, Delhi, Indore, Hyderabad and Chandigarh-were out of Mumbai. Through most of the day, worried passengers kept landing up at the airport to inquire about their flights and were often given vague responses by seemingly uninformed staff.
The airline transferred many flyers from its cancelled flights to later flights, but was unable to assuage passengers' concern and anxiety. "My flight to Lucknow has been cancelled and the airline has put me on a flight on Tuesday morning. But I am unsure if that too would operate," said a passenger at Mumbai airport.
Many passengers claimed that, cashing in on Kingfisher's flight cancellations, major airlines have jacked up their fares on several busy air routes by 10% to 25% over the past few days. On the Delhi-Mumbai route on which one-way airfares average about Rs 4,500-5,000, the prevailing ticket prices of some airlines ranged between Rs 6,500 and Rs 7,400. Spot fares were even higher.
"The problem is that Kingfisher is selling tickets on flights it has cancelled. So passengers know only at the last minute that their flight is cancelled. What's worse is that not many airlines are now willing to accept passengers of Kingfisher's cancelled flights as they are unsure of getting paid by the airline. So people have to buy spot fares at airports which are high," said a senior airline official.
To lure customers back, the airline has floated standard fare coupons of Rs 4,500 for all sectors, said sources.
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