A government order suspending its licence indefinitely has grounded Kingfisher Airlines, leaving in its wake turbulent times for travellers, employees, lenders and shareholders.
The airline’s permit had been suspended with effect from October 20 and would not be revived until it submitted a concrete and reliable revival plan, a notification issued on Saturday by the Directorate General of Civil Aviation said.
The airline failed to submit a plan for resumption of flight operations and asked for more time instead, which was rejected, the regulator said.
Experts say the airline’s exit from the Indian skies will prompt rival airlines to further jack up fares, especially with festival season travel and higher demand for seats. “Other airlines have already taken a long term view on fares and now they are already high. Now without Kingfisher, they will go up further. It will be bad days for passengers,” said Jitender Bhargava, former executive director of Air India.
However, rival airlines denied any move to jack up prices, as Kingfisher, with less than 4 per cent market share, is no more a force to reckon with. Ankur Bhatia, director of online airline reservation system company Amadeus India, said fares may not go up in the coming festival season as Kingfisher was running a scaled down operation and there had been excess capacity.
Meanwhile, the experts say Vijay Mallya’s UB group needs to pump in over Rs. 3,000 crore to get Kingfisher airborne again as no foreign operator would come forward to invest in the airline in its present state.
“I think restarting a five aircraft operation without a significant recapitalisation of $ 600 million immediately is meaningless. Kingfisher's turnaround could cost $ 1 billion,” Kapil Kaul, CEO South Asia, Centre for Asia Pacific Aviation (CAPA), told The Hindu.
He said: “Kingfisher Airlines’ licence suspension is on expected lines. This will allow its management time to rethink about complete revival or assess damages due to possible closure rather than restarting five aircraft operation. A revival is totally dependent on the promoter’s ability to raise a minimum $ 600 million, which is highly unlikely. Every stakeholder must take note of their risk positions due to a possible closure and UB group needs to prepare for an onslaught of legal cases.” .
Mr. Bhargava said the government must now take a stand to protect the interests of the over 4,000 employees who remained unpaid for seven months and the banks who have a collective exposure of over Rs. 7,500 crore. “The DGCA’s decision came too late. By suspending the licence, it has done Mallya a favour. The airline cannot revive with so much debt and no foreign airline will find it viable,” he added.
(With inputs from Sujay Mehdudia, New Delhi)