VT-ADR Kingfisher Airlines A320 rotting at Delhi Airport (Photocredit: Anonymous)
I don’t intend to be soothsayer on this blog, but at the same time not a doomsayer either! I’ve been trying to be very positive about Kingfisher Airlines in my head for a very long time, and something tells me, that if they survive this ongoing phase of problems, they will come back as a stronger service-oriented institution in the new changed environment. However, for the time being, the troubles seems to be getting bigger and bigger for them, making them perhaps a case for being jilted from oneworld before they get to join, just like AI got the boot from Star Alliance.
I love those guys, seriously. They gave me 2 free domestic Kingfisher First class tickets last year, on spending Rs. 7,00,000 (US$ 14,000) on my American Express Kingfisher First credit card. They gave me an upgrade on my last trip with them on the gate. But they are in financial trouble, and they don’t seem to be able to figure out just yet how to get out of it. And here is how things really are:
- For the past five months, KFA hasn’t made salary payments to its employees. So, that is a long stretch of time to eat up into the savings of anyone, and the airline has started to loose people all over the place from flight attendants to pilots. Apparently some people did receive some moneys in October 2011, but things relapsed again and they are unable to get funds to pay salaries.
- Next up, under the garb of their new strategy to kill low-fare operations and become full-fare carriers, in November 2011 they pulled out some planes from operations, cancelled about 50 flights and killed a few of their second and third tier city operations. All this, while word got around that they did not really have the money to operate those flights. Public relations fiasco happened.
- The airline already has a lot of debt on its books, and the banks which gave it money had to sheepishly accept a proposal to convert their debt to equity when they were not paid back in time. So about 29% of the airline is already owned by banks, who can’t do much but to pour good money after bad money to keep it running.
- The companies which provide it jetfuel and the airport operator of Delhi, as well as Airports Authority of India (which owns most airports in India), put the airline on a pay for use model. So, no more credit to the airline, they pay, they use. Else not. News reports suggested that a lot of flights sat on the tarmac without fuel the day this happened.
- The airline goes to the banks asking them for more loans. But, this quickly becomes a political hot potato where members of the Parliament of India question why a bailout of sorts should be given to a private enterprise. Kingfisher is still looking for that money. The biggest bank in India has called it a non-performing asset.
- Then, one of the cheaper tricks in the book surfaced. The airline had been reneging on its payment of taxes collected from employees for the past two years. Also, the service tax collected from passengers (its a sort of Value Added Tax/Goods and Services Tax) was not paid to the respective departments. Accounts were frozen. Further deterioration in the situation of the airline.
- Kingfisher clearly does not have the money, nor the appetite to keep planes in the air right now. Lessors who had leased these birds to Kingfisher started to squirm when they did not receive their payments in time. They at least had the planes to take back, so two of them are already back in Europe.
- Kingfisher is looking around for money, and popular rumor is that the reason British Airways is supporting the entry into oneworld, is because it is interested in taking a stake in the airline. It could be true or not, time will tell. However, right now, there is no way for them to invest since the government rules in India do not allow for investment by foreign airlines in Indian airlines. A local white knight has apparently been found, and he runs a parabanking company in India under the ‘Sahara’ brand (ex-owners of Jetlite). Now, he has lent some Rs. 7.5 Billion to the airline to get back in shape.
- All the pipe dreams of being a luxury airline are going down the drain. On the Airbus 330s the airline operates, now the bar is going to be thrown out shortly and more seats will be stuffed in. These planes, 5 of them, are used for services to London and Hong Kong. They called them funliners long back, guess time to change the term to fund-liners now!
- And amongst all this, what does any company do? It fires more people. So, that is also the Kingfisher plan. Fire people, and add the work to the current work of the other people you retain. Sigh.
All along, these were financial troubles. But the big fat lady sang today (the Directorate General of Civil Aviation, a.k.a. India’s FAA), and in a recent audit conducted of the airline, they are clearly troubled with the fact that the airline has a foot-to-mouth existence. It asked the airline to give a timeline to the resumption of normal operations.A look at the picture above should tell you a little something about how far things have gone on in the airline. In their words, Kingfisher Airlines safety is a concern. They are prime for a shutdown.
The airline, still hoodwinking everyone, issued a statement later, which it put up on Facebook. Here is what they said:
We would like to clarify that DGCA did not have any significant findings or concerns …with regard to safety at Kingfisher Airlines and that we have adequate number of pilots and engineers to operate our scheduled services.
We would like to reassure our valued guests that at Kingfisher Airlines, safety is of paramount importance and that our scheduled flights will continue to operate with utmost safety in full compliance with regulatory requirements and stipulations in this regard.
I suspect what they really meant was, that the 150 page report was a piece of useless babble.
And here is a miles-collector me, wondering, will they see the face of February 10 when they will go on board oneworld? My last experience with them was not so bad after all. Or maybe, its just me they treat in a preferred manner. 😉
Photo credit should be to “Sankaps,” the FT member who originally sent me the picture…
Otherwise, I think you are right on. Sadly, KFA will be gone soon. They were interesting while they lasted..
I still have miles on them, and I continue to earn them. so, I hope they are not gone that soon.
I’m flying them from LHR to BOM on on 1/27. What if they don’t fly, what options do I have, I bought the ticket from Expedia. There is a Jet flight 1 hr later, would KFA put me on that if they cancelled their flight?
@Divyesh, as of now, the flights to London are not affected to the best of what we know. If you are flying business, I can tell you the champagne is gone though!
@Aadvantage Geek: Yah we Indians tend to save a lot. It is in our blood….
@AJ: Sad to see the fate of VT-ADR lying unused since 2009 when it suffered a minor bruise to its wing. This aeroplane was only acquired in 2006. Looks ghostly now. Sad face of KF.
How do they survive without paying their employees? How do their employees survive? Is their savings rate that high in India?