Sudden attachment of bank accounts caused the crisis: airline
Even as the government ruled out a bailout package for the cash-strapped Kingfisher Airlines owned by liquor baron Vijay Mallya, the private carrier on Monday blamed the Income Tax authorities for the widespread cancellation of flights.
“The prime reason for the current disruption in our flight schedules is the sudden attachment of our bank accounts by the I-T department. This has severely affected our ability to make operational payments, leading to the present curtailment,'' Kingfisher spokesperson Prakash Mirpuri said in a statement. “We are in dialogue with the tax authorities to agree upon a payment plan and get the bank accounts unfrozen at the earliest. We are appealing to them to see reason that inconvenience to the travelling public is not in anybody's interest.''
The statement said employees' salaries can be paid and the “grounded aircraft can be recovered quicker once the bank accounts are unfrozen and the schedule is restored on priority.''
The Directorate-General of Civil Aviation (DGCA) has summoned Kingfisher CEO Sanjay Agarwal and top officials to appear before it on Tuesday to explain the large-scale disruption in operations. The airline cancelled over 30 flights on Monday, including those to Bangkok, Singapore, Kathmandu and Dhaka, leaving hundreds of passengers stranded at several airports.
About a third of its flights were cancelled in six metros on Sunday and similar disruption and delays were witnessed in smaller cities.
Civil Aviation Minister Ajit Singh ruled out offering a bailout to the airline. The first concern was that passenger safety should not be compromised in flights that were being operated. “Then we can see what reply they give. The DGCA is inquiring into it.''
Kingfisher, which suffered a loss of Rs.1,027 crore in 2010-11 and has a debt of Rs.7,057.08 crore, claimed that only about 15 per cent of its flights operating for the past three months have been cancelled.
The airline posted a Rs.444-crore loss in the third quarter this fiscal. As many as 14 flights from Mumbai, seven from Kolkata and six from Delhi were among those cancelled on Monday.
Keywords: Kingfisher Airlines, Kingfisher flight disruptions
The company is overambitious in a market which regularly has its ups and downs.Todays airline market in India is very tough with so many new entrants.Vijay Mallya has very good intentions in giving a large number of people opportunity to fly and to be employed with them.They should sell off and tighten their company and attempt to grow slowly.Such a thing is totally opposite to his flamboyant nature.With so many MBA's trying to get high wages it will be seen as a den of looters.The aircraft personnel and the management will all be taking high wages.They must now look for long term gains.The company must go for massive infusion through share mart and build slowly on a few important destinations built from their home base Bangalore. They should build the Company with employees who want to grow slowly with the Company.
Put it this way, if I don't have money (which 70% of Indians live on less than a dollar a day) will Vijay Mallya give me a bail out. No!, so no way should he get public money to bail out is airline. He needs to sell his assests, pay the staff and let Kingfisher go under. Its a business, other airlines will come and fill the vacuum.
The final decision is certain that no individual or company has any
necessity to change their crooked ways of accumulating wealth,enough if
they flex the concerned authorities to their convenience.
As per the provisions of IT Act, 1961 the amount of TDS should be remitted to the Government within 7 days from the date of deduction. This money does not belong to Kingfisher so how can Kingfisher state that the problem is due to IT Department.
Dont blame it on Income Tax authorities.Liquor business and airline business can't go hand in hand for reasons- there is a wide difference between the the type of customers involved in both busines and the way how the business is operated.
if there is a further loan given to KF by the banks, there should be collateral provided by Mr Mallaya (his stake in UB or something else of value atleast equal to the second loan). Otherwise its just a waste of public money and another scam in waiting. KingFisher's business model is flawed and it will not succeed with its current model. If they want to be serious players in Indian aviation then they need to follow a model like that of Indigo. With the current model they can be a niche player at best. That said the environment in India for airlines is tough. Too much tax on aviation fuel, high airport charges, huge pilot salaries and so on. The airlines should reach an agreement to cut down on pilot salaries, or otherwise make 60% of the salary variable based on airline profit.The government should also reduce the taxes on aviation fuel.
This looks like deliberate act from KF, to pressurize I.T. to
unfreeze their black money. Only common man of this country is going
to be crushed either way. If I.T. dont unfreeze account, employees
and passengers take the hit and if they do, then this sets example to
all such tax evaders how to manipulate,again indirectly mocking the
common tax payer.
The PILOTS deserve decent salary and remuneration, because of their technical know-how and expertise! The BURDEN they carry on their shoulders for a safe-travel of the passengers are no-silly thing! I was on an American airliner, Frontier Airlines recently, all I did was, I went and sat on the plane in my seat, SUCH WAS THE SMOOTH SAILING,I didn't know when the plane took-off and landed.[now, don't tell me,I fell asleep,I did not] I went to the Pilot and applauded his expertise in handling the plane! Kingfisher Airline, has to find some other means and measures to cut
their cost of running the Airline !!!
The parachute in the cartoon is really needed by the officers of the airline. God forbid, if there is an accident because of lack of fuel or inadequate maintenance, it will result in the loss of human lives on national and international routes and the airline can be charged with willful negligence. Remember the Bhopal case when the CEO was charged with negligence. It is not the Indian Railways, which can get away with the payment of Rupees one lakh or so to each case. It is time for all company and government officials who may be able to stop an accident from occurring may do so or face the consequences of their acts of commission and omission.
He has money for IPL, F1 and other adventures. He has money for
launching his 'calendar girls' which is ridiculous in the first place.
This is just a sham to make black white!
It appears that Vijay Malya's Kingfisher Airlines can come out of woods only if Mr.Malya, Congress MP is made Civil Aviation Minister. Definitely he can perform better than earlier incumbent Praful Patel. The performance of UB group is rather good all these years and how the graph is downturn for Kingfisher? He should seek the kind advice of his former associate and innovative man Capt.Gopinath ( of Deccan Air) to overcome economic crisis and improve the image.
It is like a thief complaining that he could not pay his bills this month because the cops suddenly arrested him without notice, even though he has been a thief long long time!
Non viable business should die. In this case the customers were least thought of by the owner of the air line. Who will use Kingfisher on choice in future? Govt should ponder how it can encourage free enterprise. The passengers are entitled for reliable, safe and comfortabel travel at a fair cost. By artifical restrictions they are preventing this. Many jobs can be created if any of the airports in the southern states can be developed into an aviation hub. Airlines need Repair, Mintenance and Overhaul. We should compete in this sector and generate profit and good reputation.
What an unfortunate situation! KF is one of the few brands in India people respect
and trust. Good service and competitive prices. It's sheer stupidity to say that the
UB group has "squandered money by investing infamously in IPL and F1" as a Mr.
Kshitij Agarwal suggests above. The IPL and F1 are franchises that have a lot of
potential for foreign investment and profits. We should be proud that an Indian
company has taken the initiative to grab this opportunity. This government is
bent on sabotaging the aviation industry. It doesn't get its stuff right (read Air
India and Indian Airlines), and its rigid in dealing with private companies. Just
think about the damage this can do to investor confidence.
@ reddy - that's right, we need to improve state transport by bus and we
need to improve railway as well
faster railway and comfortable journey,
also like railway ticket is always the same cost, whether you buy 1 year
before the journey or on the day of journey - we need this concept in
airline ticket
Kingfisher is bound to fail. It is only a matter of time. In my opinion,
Mr. Mallya has not performed well in a competitive environment. IPL, F1
and Kingfisher airlines are prime examples. Beer business is a monopoly
business in many states. Wonder what will happen to UB group if
Budweisers and co are allowed to sell beers in India with no barriers!
Mr.Reddy,
Airlines are governed by the DGCA.
Bus operators are governed by the respective state govt transport dept.
This is a plain and simple case of bad management by Vijay Mallya. If he had focssed more on running a proper business like a proper business man, and been less focussed on being a celebrity and spending time with actresses and actors etc, the crisis will not have happened. He mismanages the business and ruins it and runs to the government wanted to be bailed out which is completely not fair. Hope this has a sobering effect on him and he manages his other businesses appropriately.
I am not very surprised at the crisis for King and the apparent denial of Govt sympathy, let alone support. We have an airline belonging to a group that doesn't have clear cut profit making strategy, neither wants to cut down on unnecessary squandering and costs. We also have a govt. who is not bothered about Indian companies making money but are more in support of middle east companies trying to suck out of this crisis....Jet AIrways will be their next target, after Kingfisher. Air India will also meet the same fate and major middle east carriers will rule our skies
DGCA is bothered about the passengers inconvenience. And no one bothers about bus passengers? why this partiality?
Let Mr. Mallya sell his IPL Team and Force India F1 team to make money to
keep up his so called dream airline company, the Kingfisher Airlines. It
is quite obvious that the govt will not bailout private players.
The fact remains that just as Delta airlines was done out of its India routes by excess (Air India) capacity, so is Kingfisher. This excess (Air India) capacity that is flooding the market exists at whose expense? At the expense of Indian citizens by way of fiduciary currency flooding (inflation) and taxes. For whose benefit? For the benefit of so called public servants, the chattels, chappals and junkets.
KF has built a formidable brand equity and salience with the customers when it has started its operations with all the right steps, noise, and consistently delightful experience.
Now, its on the throes of major upheavel. KF and its promoters must be very clear whether to be in the business or not. If not, its better, its phased out completely instead of frittering away carefully nurtured brand equity.
Govt cannot and should not allow any of the individual private player to be bailed out under any pretext no matter what the finest technicalities. Market economy must take over in ensuring that only the best and fittest can survive and provide the consumer the right experience and choice.
Govt must take consumer as the pivot in addressing this industry specific ailments and any other governance related decisions wrt a particular firm.
How come Indigo surviving in this environment? what is it that they are
doing so differently? as rest of the airlines are struggling , its only
Indigo which is earning profits! Lot to learn from Indigo...
both dgca and kingfisher should try to sort out this problem by making a good stretergy and all empolyee's of kingfisher should also try to give thier share of salaries to sort out this debt and kingfisher have many products also so kingfisher should try to take some help from their profits of other business because people safty is above from thier profits
Pilots pay shouldnt be cut. They dont earn so much if you see how much they have
spent in training to become a pilot. They recover training costs in maybe 5 years..
Why UB group which is infamous for its squandering investments in F1 and IPL teams is crying for financial help. It seems KF is looking to sell its stake to some foreign player(Richard Branson's Virgin Atlantic) by pressurizing the government to allow foreign players in the domestic market.
It is however time for the government to be prepared to lose public
moneys if the airlines fails. Depositors and policyholders' moneys are
involved and it is time that their interests and moneys are also
protected.
Kingfisher is one more victim of Indian Govt. profligacy. (via Air India in this instance).
Paying too much salary to the pilots, senior pilots, captains & is also the major reason for this turmoil in domestic aviation business. If the jet fuel constitutes 40% of the working cost then the extravagant salaries also cost 10% of the working cost. Cut the salaries of pilots by 50%, still the airlines can save a good 5% to pay back the debt. The salary cut of the pilots should be throughout the industry so that the pilots don't keep on switching the airlines for extra bucks. I am sure this move will help the troubling airlines reduce the level of debt. Pay cut won't do much harm to the pilots as they alreay earn too much than any other sector in the country.
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