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Kingfisher passengers should not be concerned about safety: DGCA

Director General of Civil Aviation EK Bharat Bhushan said no safety "compromises have been made" by the airline.  He also said a special safety audit would be carried out.

Kushan Mitra | February 22, 2012 | Updated 10:07 IST

The Director-General of Civil Aviation, EK Bharat Bhushan met with Sanjay Aggarwal, the embattled chief executive of Kingfisher Airlines. The Vijay Mallya-promoted airline which has been cancelling several flights over the past few days is left with only 28 airworthy planes out of a total existing fleet of 58 aircraft. Some aircraft have already been repossessed by leasing companies.

Addressing journalists after the meeting Bharat Bhushan reassured passengers booked to fly on Kingfisher that safety is paramount and "no compromises have been made". However, he did state that his team at the DGCA will conduct a special safety audit on operating Kingfisher aircraft on an ongoing basis. As for the airlines much reduced schedule, he stated that he has given the airline a few days to draw up a comprehensive schedule change with 28 aircraft which he estimates can only operate 175 flights a day as against the 400-odd flights listed by Kingfisher on its winter schedule.

However, beyond refunds and urging other carriers to help, he said that the DGCA could not act against airlines who have priced tickets on the higher range of their price brackets. "If you book a ticket 15 days in advance and then have to rebook because your flight is cancelled, you will have to pay the difference." However, he did not state what would happen to passengers on sectors where Kingfisher held a monopoly or was one of two airlines.

Fares, particularly spot fares, have climbed to higher levels across India in the wake of Kingfisher's second implosion. Spot one-way fares between Delhi and Mumbai, India's top air sector where Kingfisher operated over 10 flights a day at its peak have hit Rs 6,500 on a three-day advance booking. However, on non-refundable 'Special Booking' fares offered by some online travel websites on an 'unnamed' airline which many suspect is Kingfisher, tickets are available for Rs 3900, the usual average fare for this sector.

Will Kingfisher survive? Bharat Bhushan said that the Civil Aviation Ministry was not taking any adverse action such as cancelling the airline's operating certificate. "Kingfisher is an important airline and taking such action would be detrimental to the interest of passengers," he stated, replying to a question. However, he also said that the DGCA or the Ministry could not do anything about the airline's problems with the Income Tax department, where Kingfisher is facing massive problems because they allegedly deducted tax from employees but did not deposit it with the government. The airline has been unable to pay its employees since December, and the DG pointed out that the airline has assured that December salaries "would be paid soon" and all other dues will be "cleared by March 20". However, given the non-payment of salaries, the DGCA is not taking action against pilots who are resigning en masse from the carrier, mainly to join Indigo.

Apparently, Aggarwal and his executives informed the DGCA that "an infusion of money from banks" would take place in the coming week. However, with de-motivated employees, a constant stream of bad news and public opinion swaying against any form of government aid, either directly on indirectly through public-sector banks, many people are placing bets on how long the airline will survive in its current form. Meanwhile, the Kingfisher Airlines scrip has come off its opening lows. The stock perked up a bit after some holders of its optionally convertible debentures (OCDs) agreed to convert the OCDs into shares. Kingfisher had allotted 70.9 million 8% OCDs to three entities at 100 rupees each in January last year.
 
That said, Vijay Mallya has survived massive storms in the past. This one however, may be the roughest storm he has ever faced.

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