Kingfisher crisis: Govt denies bailout but help is on its way

It is learned that Kingfisher Airlines chairman Vijay Mallya has spoken to the aviation ministry about bailing out the cash-strapped airline and the aviation ministry has, in turn, spoken to the finance ministry on the issue.

The finance minister is expected to speak to banks to provide the ailing airline with working-capital-loan, to keep itself afloat.

Aviation Minister Vayalar Ravi while speaking to the media said that Kingfisher Airlines Chairman, Vijay Mallya, had approached him over the following HPCL’s refusal to give the airline anymore fuel on credit.

Sources at the aviation ministry said while an Air India-type recast is not possible for Kingfisher Airlines, oil companies might be asked to extend credit on fuel purchases to the airline.

All the state-run oil marketing companies - HPCL, IOC and BPCL - have denied extending credit line to the liquor baron Mallya-ownedairline and asked it to pay for lifting jet fuel on a dailybasis.

The airline has suffered a loss of Rs 1,027 crore in2010-11 and has a mounting debt of Rs 7,057 crore. Voicing his concern over the issue Aviation Minister said that Kingfisher’s woes aren’t isolated and that the entire industry is facing a crisis because of higher rates of aviation fuel. The minister further added that he will request the states to look into the taxes levied by states on aviation fuel and that. Taxes on aviation fuel is a state subject and different states charge different rates of tax on aviation fuel.

Jet fuel taxes in India average about 24 percent, one of the highest in the world, according to some estimates.

The Directorate General of Civil Aviation (DGCA) has said Kingfisher is not operating 36 percent of its winter schedule flights, media reports said.It said Indigo and Spicejet also operated 30 percent fewer flights than scheduled.

The aviation regulator also said it may have to redistribute the vacant slots of Kingfisher, which could benefit Jet Airways. It added no concessions would be given to Kingfisher.In another development, the regulator said it would start financial surveillance of all airlines.

Kingfisher’s shares are down 1o percent at around Rs 19.50.

Meanwhile Celebi Nas, the company that provides ground handling support to Kingfisher airlines has threatened to stop providing its services to the airline following non-payment of dues. Over the last one month over 100 pilots have quit Kingfisher airlines over non-payment of dues.

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