Kingfisher now risks losing bank guarantees with AAI
10 Nov 2008
New Delhi: When trouble comes it comes in droves, as one of India's two largest private carriers, Kingfisher Airlines may now be discovering to its discomfiture. Reports suggest that government nodal agency for airports, the Airports Authority of India (AAI), may be compelled to encash Kingfisher Airlines' bank guarantees worth Rs60-70 crore unless it clears dues of Rs256 crore, or atleast presents a clear schedule of payments within a week.
Kingfisher has already been embroiled in a aircraft seizure imbroglio with GE Commercial Aviation Services (GECAS), which recently petitioned the Indian civil aviation regulator, the Directorate General of Civil Aviation (DGCA), to help it recover four Kingfisher operated aircraft. The matter is now under litigation.
AAI will require permission from the ministry of civil aviation, however, before it can initiate action against the carrier, which is now one of India's two largest private carriers after its merger with low cost carrier Air Deccan.
AAI officials have clarified that Kingfisher has cleared only Rs10 crore of the Rs286 crore in dues that has accumulated by now in its name. By this month another Rs30 crore would have been added to the earlier backlog of Rs256 crore.
Reports suggest that the AAI may move against Kingfisher as quickly as coming Monday.
This has been countered by Kingfisher officials who say they are in dialogue with the AAI and that a mutually agreeable time frame may be decided upon at a meeting between both parties on Monday.
Kingfisher chairman Vijay Mallya has already asked the aviation ministry to allow payment of dues in installments. This is yet to be sanctioned by the ministry, however.
Kingfiher is not the only airline whose dues now overshoot bank guarantees. However, AAI has failed to move against any of these players as the ministry is loath to penalise carriers who are battling a hostile operating environment.
As of September-end the AAI has to recover dues of Rs1,171 crore from domestic and foreign carriers, with domestic players alone accounting for Rs1,012 crore of this total. Privately-run Delhi and Mumbai airports also need to recover dues of over Rs80 crore each.