Three of the airline’s Airbus A320 aircraft (registrations VT-KFA, VT-KFD and VT-KFE) have been deregistered by the regulator over the past two months, said a government official, who declined to be named.
The airline has struggled to make payments to aircraft lessors, many of whom are now repossessing the aircraft.
Another lessor, which owns Airbus A320 VT-KFG, has also complained about payment defaults, according to this official.
The regulator has sought an explanation from the airline on the “default notice” as once the lease agreement is terminated, the aircraft needs to be deregistered, this official said.
A Kingfisher Airlines spokesperson did not offer any comment for this story.
Technicians responsible for aircraft maintenance at Delhi airport went on strike despite pledges made at the end of last month that they would be paid their salaries.
Pilots are also set to report sick to avoid flying to protest delayed salary payments, according to two company executives, who also confirmed that lessors were taking back planes.
Kingfisher Airlines, which has not made a profit since its inception in 2005, has been cancelling flights since 17 February because of a severe cash crunch. It’s operating only 175 flights a day out of a total 240 that it’s supposed to. A year ago, Kingfisher Airlines used to fly 340 flights a day. The Directorate General of Civil Aviation, or DGCA, deregistered two turboprop ATR aircraft in January following a letter from German lessor KfW IPEX-Bank GmbH in which it stated that payments were not being made on time.
Kingfisher Airlines is still trying to get accounts attached by the income-tax department freed. The accounts were frozen because the company allegedly hadn’t paid tax dues.
Experts pointed out that protests by technicians or pilots will derail Kingfisher Airlines’ truncated operations, as will the repossession of planes.
According to a senior Kingfisher Airlines executive, lessors were seeking to take back one A330 aircraft that is used for flights to London and Hong Kong. The A320 planes are used for domestic operations. Mint could not independently confirm whether lenders have approached DGCA for repossessing the A330 plane.
According to Kapil Kaul, chief executive officer (South Asia) at consulting firm Centre for Asia Pacific Aviation, or Capa, the current crisis shows India’s aviation industry in a negative light.
“It reflects poorly on the government for failing to provide a strategic framework in terms of policy, regulatory and fiscal issues. The industry has lost $6 billion since 2004, another $2.5 billion will be added this fiscal and the overall debt burden is at present $16 billion (excluding debt raised by airports) and yet, we haven’t seen any tangible commitment from the government to address these structural issues, especially when the dire state of airline financials are known to everyone,” Kaul said. “We only react when there is a crisis and have never taken a proactive approach.”
“This crisis also reflects poorly on the airlines for aggressive business plans without adequate capitalization and preparation, poor risk management, underestimating the impact of structural challenges and more important, operating continuously with below-cost pricing,” he said.
Without a well-structured civil aviation policy, strong regulatory framework and supportive fiscal regime, Indian aviation will always be struggling, Kaul said.
Kingfisher Airlines fell 1.62% to end trading at Rs.24.25 on Thursday on BSE. The benchmark Sensex lost 0.95%.
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