Cash-strapped private carrier Kingfisher Airlines, which is struggling to stay afloat, was, on Wednesday, dealt with yet another blow when the International Air Transport Association (IATA), a leading international association, asked travel agents to immediately stop booking tickets on the private airline's behalf for failure in settling dues since February.
The move — which can be compared to the Reserve Bank of India (RBI) removing a commercial bank from its currency clearing system — came hours after the Income-tax Department froze more bank accounts of the Vijay Mallya-owned airline for non-payment of dues.
Aviation analysts said the IATA move to suspend Kingfisher from the clearance system on account of non-payment of dues was likely to affect nearly 30-35 per cent of its business. They said that it would put a question mark if tickets for the airline could be booked using globally interconnected systems such as Galelio, Sabre and Amadeus.
The IATA had also barred Kingfisher from its international ticket clearing house (ICH) system on February 2, but reinstated it eight days later after some payments were made. “The IATA has suspended Kingfisher Airlines' participation in the ICH. This is because the airline did not settle their ICH account within the stipulated deadline," a statement issued by the IATA from Geneva said.
“Kingfisher's participation in the ICH will be reinstated after the airline fulfils the ICH requirements,'' said the association that had all passenger and cargo carriers as its primary members. The IATA further said that the passenger carrier would not be able to settle its transactions from other ICH member airlines.
“Suspension from the ICH means that the airline will not be able to settle their transactions with other ICH members via the clearing house.'' However, despite the suspension, airlines can continue to function by settling bilaterally with other airlines.
Kingfisher has a debt of Rs.7,057.08 crore. Its net loss widened to Rs.444.27 crore for the quarter ended December 31, 2011, from Rs.253.69 crore in the October-December quarter in the last fiscal.
The airline's share, which was ruling at Rs.49.25 about a year ago, closed on Wednesday at Rs.21, with a loss of 6.25 per cent over the previous close.
Reacting to the suspension by the IATA's clearing house, Kingfisher Airlines said that due to its accounts getting attached by the tax authorities, it was not able to make payments to the ICH, which resulted in ‘temporary suspension.'
“We are working with the tax authorities and expect the accounts to be un-attached shortly. As soon as this is done, we will pay our dues to the IATA and get reinstated,'' the airline said in a statement from Mumbai.
The private carrier, which is going from one crisis to another, said the ICH suspension did not impact those travelling on any Kingfisher Airlines flight or its flight schedules. “Our guests can continue to book with confidence either directly with Kingfisher Airlines or through their travel agents,'' the statement said. It said the airline continued to operate 200 flights to 46 domestic and international destinations.
Meanwhile, the Airports Authority of India (AAI) has also asked Kingfisher Airlines to provide inter-corporate guarantee to continue getting services from the airport operator. The airline owes the AAI more than Rs.260 crore.
The Director-General of Civil Aviation recently approved curtailed flight schedule of Kingfisher, allowing it to operate 175 domestic and 24 international flights a day with a fleet of 28 aircraft. The airline earlier used to operate more than 400 flights a day and had 70 aircraft in its fleet.