Kingfisher in a monetary net?

It is sad that Kingfisher is reduced to the state it is in today. But there are many alternatives the airline might be working on including the FDI participation by a foreign associate. If and when such a move occurs, banks may relax their attitude and demands

After waiting for seven months, engineers, pilots and other staff members of the Kingfisher Airlines called it a day with “enough is enough” and struck work, leaving stranded passengers inside the aircraft at the Delhi airport, for about twenty minutes!


The fact is that Kingfisher Airlines has been having this sort of labour problems for months now; despite not receiving the salaries for several months, a lot of the staff has been responding to the call of duty and has banked on assurances that got them nowhere. Flights were inordinately delayed and many failed to take off. Eventually, flights had to be cancelled resulting in untold miseries to the passengers whose travel plans went astray due these troubles.


Though the airline has a large fleet of 64 aircraft, operationally, it had come down to 20 but this liquidity crunch has taken a heavy toll. While accurate figures are not available readily, banks have lent the airline some Rs7,000 crore or so. It would appear that banks have been demanding their overdue loans and are unwilling to extend any further credit.


Meanwhile, with the revised attitude of the government towards foreign direct investment (FDI) in aviation, at the moment, there is no sign of a foreign partner being roped in to revive the fortunes of Kingfisher.


However, this flamboyant industrialist, Dr Vijay Mallya is perfectly capable of springing surprises and before long such an announcement is expected.


There is no doubt in the minds of regular Kingfisher passengers that the airline has provided the very best of services in the past but the present impasse has taken too long to overcome; yet their gut feeling is that this is bound to happen soon.


Other domestic airlines have come to the rescue of stranded passengers; Jet Airways, SpiceJet and Indigo are having had a field day so far and have near-full occupancy on their flights, at the expense of Kingfisher.


Kingfisher, a member of the UB family has had a brilliant record of passenger service in the past but in the last few months due to the delays and cancellations, their image has taken a beating.


Ajit Singh, the civil aviation minister, in response to media enquiries has stated that the DGCA (Director General of Civil Aviation) will not hesitate to close down the airline if is not airworthy as passenger safety is the first priority. Hence, for the next few days when this issue is hotly debated, no flights may take off, and Kingfisher will remain grounded due to absence of staff.


What can the beleaguered airline do? There are many alternatives that it might be working on including the FDI participation by a foreign associate; if and when such a move occurs, the banks, who have been sitting on the fence, may also relax their attitude and demands and extend the much-needed credit time and limit; the overdue salaries may be covered by raising the funds by fully convertible debentures with a reasonable interest rates and reworking profitable routes and flights to select destinations, as a start, and aim to achieve a100% occupancy factor. 


These may be the rights steps that Dr Mallya may be working on, sitting quietly in a secluded corner in Paris where he is reported to be staying at the moment!


(AK Ramdas has worked with the Engineering Export Promotion Council of the ministry of commerce and was associated with various committees of the Council. His international career took him to places like Beirut, Kuwait and Dubai at a time when these were small trading outposts; and later to the US. He can be contacted at [email protected].)

1 decade ago
Has anyone been trying to find out why the airline has come to this stage.BAD MANAGEMENT.It has been top heavy and bleeding money right through.Dr Yes Dr Mallya wants flamboyant lifestyle and wants to be seen at the race courses, F1 circuits, IPL, Yachts than at offices.People have seen him drunk at IPL matches.
If at any time funds do happen to come to rescue KFA, then strict management initiatives and control are a must.Otherwise the sad story will repeat itself.
Why is there a soft corner for the promoter in the article.He should be in jail actually.Usurping srvice tax and TDS collected from full fare paying passengers for him to have a good time??!!
Can you blame the staff to stop working when they are not paid salaries for months.And during that time, did Dr Mallya starve?
He was having a good time alright and so was his son burning public money to fund their lavish lifestyle.
He was so brazen and banks agreed to pay him a fee for offering his personal guarantee to the company he owns.
He is not worried as banks are in a big soup and they will work out a scheme to save their own skins.
For him and his son the good times continue.
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