Business Today

On a wing and a rulebook

Kushan Mitra        Print Edition: Apr 15, 2012

For once, Vijay Mallya left his Maserati Quattroporte, which he usually drives to Parliament, at home. He pulled up outside the office of E.K. Bharat Bhushan, Director General of Civil Aviation (DGCA), in a modest Ford Endeavour.

Wearing a white safari suit, the Chairman of the embattled Kingfisher Airlines quietly walked into the DGCA'S office with his airline's Chief Executive, Sanjay Aggarwal, in tow. What transpired inside is not known, but Mallya came out all smiles.

FULL COVERAGE:How Kingfisher landed itself in this mess

Perhaps the broad smile had something to do with some recent utterances by Ajit Singh. The Civil Aviation Minister, whom Mallya bumps into every day in Parliament, has stated on record that Kingfisher's licence will not be cancelled so long as the airline has five aircraft operating.

In fact, DGCA rules state that an airline has to have at least five operational aircraft to be considered a scheduled carrier. Mallya told reporters that he has 20 aircraft flying, of which 16 are operating scheduled flights.

That leaves him with 27 grounded aircraft.

But Aggarwal is confident the airline can get even the grounded planes up in the air again. "We are still talking to investors and though we cannot disclose their names, we should announce something soon" has been his refrain of late.

PERSPECTIVE:Kingfisher's loss whose gain?

It had better be real soon. Mallya's airline cannot make payments to dozens of creditors, ranging from the Airports Authority of India and aircraft manufacturers to its own employees.

Its skies are getting smaller by the day - on April 10, after a final flight between Delhi and London Heathrow, Kingfisher will stop international flights. And on domestic sectors, the carrier's market share has plummeted to just 13 per cent, from a high of 30 per cent 24 months ago.

"They cannot maintain schedule integrity," says a senior executive at another airline. "The only assets Kingfisher has are the slots it operates, particularly Mumbai and Delhi. Otherwise it would be cheaper for a new entrant to start an airline."

PERSPECTIVE:End of the international dream for Kingfisher

Surprisingly, while there has been talk of huge fare hikes, data from an online travel agency shows that apart from the Mumbai-Ahmedabad sector, where fares shot up 64 per cent, and Chennai-Bangalore, where fares rose 34 per cent, Kingfisher's reduced presence did not have a major impact on average fares between October 2011 and March 2012.

This, despite the spike in fares during the December-January travel season. Average return fares on the busy Delhi-Mumbai sector have only risen 5 per cent, despite Kingfisher halving capacity.

Perhaps failure is an option.

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