The end game finally appears to have begun for Vijay Mallya?s beleaguered Kingfisher Airlines. The government on Friday hardened its stance issuing a notice to the carrier asking why its permit should not be cancelled since it has failed to provide safe and reliable services.
Although Kingfisher has 15 days to respond to the notice, the chances of it being able to survive now seem remote. The company declared a lockout on September 30 by grounding all its 10 aircraft after a section of engineers and pilots refused to report to work citing non-payment of salaries since March.
The notice was issued by the Directorate General of Civil Aviation (DGCA) under the provisions of Section 15(2)(b) of Schedule XI of the Aircraft Rules, 1937, as the airline has failed to establish a safe, efficient and reliable service.
Union civil aviation minister Ajit Singh took note of the situation, stating that there would be no compromise on safety of aircraft operations. ?The government has also taken legal opinion. As per law, DGCA may cancel or suspend the permit of an airline for such period as he thinks fit, if he is satisfied that the holder of the permit has failed to establish a safe, efficient and reliable service,? Singh said in a statement issued by the ministry late on Friday evening.
The airline?s CEO Sanjay Agarwal had met DGCA chief Arun Mishra on October 2 and assured him that operations would begin from October 4-5. However, the airline failed to provide an operational plan to the DGCA with the employees remaining firm that they would not return to work unless salary dues were cleared. The company on Thursday extended the lockout till October 12. The situation worsened on the same day when the wife of an employee committed suicide in New Delhi allegedly due to the distress caused by the non-payment of salary for months.
The government was under pressure to act since there were demands by several sections that allowing the carrier to resume even partial operations under these circumstances would be risking the safety of passengers who would be in the hands of unpaid pilots and engineers.
Earlier on Friday, the airline management had to cancel a meeting with employees in Bangalore when they refused to budge from their stand unless salaries were cleared. In Mumbai, around 150 staffers staged a protest march following the news of the suicide. Another 100 staffers held a candlelit march in Delhi. All this added the pressure on the government to act.
The company, which has debts of around R7,000 crore and almost an equal amount of cumulative losses, was unable to get funds from banks, which wanted the promoters to first infuse equity.
The problems of Kingfisher, which never made a profit since its inception in 2005, multiplied after acquiring low-cost carrier Air Deccan in 2007.
Though earlier, it blamed high taxes on aviation turbine fuel for unviability of operations, it failed to import ATF directly after government approval. And, though, recently the government allowed foreign carriers to acquire up to a 49% stake in Indian airline companies, the chance that Kingfisher finds any taker remains dim because of its high debt and losses.
Kingfisher, which once was India?s second-largest airline, lost market share tremendously and, currently, its market share is the lowest at 3.2%. The airline, which was once had a fleet size of 64, was flying only 10 planes before the recent employee strike.
To raise funds to save Kingfisher, Mallya recently entered into talks with the UK?s Diageo to sell a stake in his flagship liquor firm United Spirits.
