Aviation regulator Directorate General of Civil Aviation (DGCA) on Saturday suspended Vijay Mallya-controlled Kingfisher Airlines’ (KFA) flying licence after the carrier failed to produce a revival plan, shocking thousands of its already distraught employees who haven’t been paid for eight months.
“The permit has been suspended till such time KFA submits a concrete and reliable revival plan,” the regulator said in a statement. The company, however, clarified that this was not a cancellation of licence, but a temporary suspension.
KFA’s employees, not paid since March, have been on strike since October 1. On Friday, the carrier, once billed as India’s most glamorous airline, said its operations would remain grounded at least till November 6.
The company said in a press release that once the issues with employees are resolved, “we will first present our resumption plan to DGCA for review, before resuming operations”.
KFA, launched on May 9, 2005, was said to be liquor baron Mallya’s birthday gift to his son Siddharth on his 18th birthday. He wanted to set up an airline that lived up to the Kingfisher brand’s catch line, `King of Good Times’.
The flight attendants were compared with ramp models and the hospitality was decidedly five-star quality. Mallya appeared himself in video announcements on board to announce that each passenger was like a personal guest for him.
Now, employees sound confused. “This is not what we were expecting. It only adds to our problems,” said a KFA airhostess, who hails from Meghalaya.
Earlier this month, the wife of a KFA employee committed suicide citing non-payment of salary to her husband as the reason in the suicide note.
“We are living off our savings. No one cares. Whom do we approach?” asked a KFA engineer based in Mumbai.
The embattled airline also have not been able to find funds even for meeting its basic needs such as jet fuel, vendor payments and statutory expenses like tax dues and employees’ provident fund contributions.
KFA implemented a debt recast package last year after which loans from 13 banks of Rs. 1,300 crore were converted into share capital. The consortium of banks now owns 23% equity in the airline.
Mallya, had been banking on the policy to allow foreign airlines to buy up to 49% in domestic carriers, which the government had allowed last month.
He had said discussions were on with three potential foreign investors to buy equity in KFA and infuse capital in the firm.
Analysts said the airline requires an immediate capital infusion of about $600 million (Rs. 3,300 crore), a bulk of which may have to come from the coffers of United Breweries, but committing funds from the flagship business could seriously dent the flagship’s business.