Kingfisher Airlines: the 'good times' are clearly over

The good times seem to have finished for Kingfisher Airlines’ customers and employees. Well, to be honest, it was over a while ago.

On Monday, the airline cancelled 12 flights from Delhi and several more across the country due to a shortage of cabin crew and pilots, reported The Times of India. The move followed four cancellations on Sunday.

The cancelled flights included those to Jaipur, Bangalore, Amritsar, Mumbai, Chennai, Hyderabad, Pantnagar and Bagdogra.

[caption id=“attachment_125700” align=“alignleft” width=“380” caption=“The airline’s staff have been deserting in droves. Reuters”]  [/caption]

Even worse, Mint reports the airline will cancel 31 flights every day for the next 12 days. The newspaper said the Mumbai-based carrier decided to cancel 27 domestic flights on key routes covering the cities of Delhi, Mumbai, Bangalore, Chennai, Hyderabad, Kolkata and Kochi, besides four international flights to Bangkok.

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There are two reasons why this is happening.

One, the airline’s staff have been deserting in droves, which means Kingfisher now has to adjust its flight operations with a dwindling number of pilots and cabin crew.

Media reports said several employees had lost faith in the struggling airline’s ability to survive and are failing to report to work because they are busy finding other jobs. Indeed, a few weeks earlier, there were reports the airline had delayed in making salary payments for August and September.

Two, the airline has been facing severe fuel shortages because of its inability to pay its bills.State-run oil firm Hindustan Petroleum, the largest fuel supplier to the airline, temporarily suspended fuel supply to Kingfisher for the second time in four months in October because the airline had not cleared a bill of Rs 130 crore.

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In July also, the oil marketing company briefly stopped fuel supplybefore restoring it again after the airline paid Rs 10 crore.

According to an earlier report, the airline requires about 45,000 kilolitres of fuel a month. HPCL has a daily billing of roughly Rs 7 crore, while Indian Oil Corporation (IOC) and Bharat Petroleum supply fuel worth about Rs20-22 lakh per day and Rs 5 lakh per day, respectively.

There are two possible consequences of these flight cancellations.

One, fewer flights from Kingfisher could cause airline fares to rise during the peak travel season (October-December). That will be a big hit to travellers because fares are already hitting highs over rising demand.

According to an India Today report, the cost of a Delhi-Mumbai one-way flight on Jet Airways, for instance, was a whopping Rs 18,184-Rs 28,188 for November 6.Ditto for flights on December 29: A one-way flight on the same route will cost passengers a steep Rs 30,000 or so.If Kingfisher’s flight cancellations continue beyond November, they could definitely push up overall fares.

Two, the struggling air carrier is looking more and more likely as a takeover candidate, but the question is, who will take it?

Currently, the airline, weighed down by heavy debt, is in talks with bankers to reduce the high interest rates on its $1.2 billion debt. Chief financial officer Ravi Nedungadi said in a statement recently the carrier was attempting to swap high-cost rupee borrowings with lower-cost foreign debt.

As part of efforts to restructure and cut costs, the airline has already scrapped its low-cost Kingfisher Red airline business. It reported a net loss of Rs 263.5 crore for the June-ending quarter.

A couple of months ago, Kingfisher’s auditors had also pointed out the company’s “networth was completely eroded” and its chance of remaining in the sky depended on more cash being pumped into the airline.Firstpost had reported that the cash-strapped airline may need Rs 3,000 crore to Rs 4,000 crore to get itself back on its feet.

At this point, given the airline’s dwindling operations, that looks like a lofty target. Either it finds the money pronto or face the inevitable: the demise of Kingfisher Airlines.