Clouds darken for Kingfisher, AAI may encash dues cheques

Kingfisher Airlines, which has been struggling to pay mounting dues to airports and aviation turbine fuel (ATF) suppliers for some time, has a new problem at hand.

Last week, some of its flights were suspended during the evening rush hour from Delhi and other airports due to alleged non-payment of dues to Hindustan Petroleum Corp (HPCL). And now, the Airports Authority of India (AAI) is threatening to encash undated cheques worth Rs130 crore from Kingfisher unless the airline pays up its dues. While some government officials put the AAI dues at Rs196 crore, others said it’s more like Rs205 crore.

A top government official said a recent AAI board meeting even discussed grounding Kingfisher flights for non-payment. “Some members felt flights should be grounded. Unlike other airlines, Kingfisher has not even given bank guarantees which can be encashed. But grounding flights is a harsh move. Unless something is done urgently, AAI is likely to enchash the cheques.”

A Kingfisher spokesperson declined to offer comments for this story.

An aviation industry expert said Kingfisher is seen as a “high cost” carrier and its financial troubles — it has never made a profit since its inception in 2005 — have been compounded on low pricing by competitor Air India in the domestic sector. “Though the airline’s load factors are far better than Air India’s, its aircraft utilisation has gone down.”

Then, in the last few weeks the airline has grounded two ATR aircraft on inability to get spares for maintenance.