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HindustanTimes Tue,22 Jul 2014

Kingfisher in limbo
Hindustan Times
New Delhi, October 21, 2012
First Published: 21:53 IST(21/10/2012)
Last Updated: 01:13 IST(22/10/2012)

Time has run out for Kingfisher Airlines after it failed to respond to the aviation regulator's queries on when it would be viable to resume operations. The beleaguered airline needed to break the deadlock with striking employees before providing a satisfactory response to the Directorate General of Civil Aviation. With the regulator suspending Kingfisher's licence to fly, liquor baron Vijay Mallya who owns the airline, will find it much more difficult to revive it. Already, its winter schedule for this year has been struck down, its employees have refused to resume work till all back wages are paid, the management has thrice extended its lockout, lenders have agreed to release money to pay only two of the seven months' salaries due, the civil aviation minister has said unpaid workers make for unsafe flights. The hope of a foreign airline or investor coming to Mr Mallya's rescue fades by the day as the rump of an airline bleeds on the tarmac.

Kingfisher's troubles stem from its desire to grow too fast, offer a richer flying experience than the competition, and an expensive purchase of the country's first budget carrier Air Deccan in an attempt to sidestep a five-year moratorium on airlines flying abroad. It did all of these around the time the global economy was convulsing and ended up defaulting on its aircraft, fuel, loans and, finally, wages. A debt recast by a consortium of banks left them holding a stake in the airline that is not worth a tenth of their loans. If Kingfisher ends up on the scrap heap of failed Indian airlines, the pain will be felt wider because of its size, it was at one point snapping at heels of industry leader Jet Airways in market share. The plight of its 6,000-odd employees was brought out in sharp detail when the wife of a Kingfisher technician in Delhi committed suicide earlier this month.

Questions linger over how an airline could reach this state within seven years of its launch. Lenders could have flagged Kingfisher's impending tailspin earlier than they did. Analysts were warning of huge unsold airline capacities amid the initial frenzy to acquire bigger fleets, yet the stock markets feted Kingfisher's listing. The government, on its part, has not set a good example by its repeated taxpayer-funded bailouts to Air India. Also, it dragged its feet on allowing airlines flying oninternational sectors to import cheap fuel, opening up bilateral route agreements with other countries to private carriers, and permitting international airlines to buy stakes in local ones. The space vacated by Kingfisher has been filled in part by more frugal airlines, yet Indian aviation is facing a capacity crunch that is pushing up fares.


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