Kingfisher Air Shunned as Cash Crunch Disrupts India Flights
Anurag Chadha had one thing to say after flight disruptions at billionaire Vijay Mallya’s Kingfisher Airlines Ltd. (KAIR) curtailed his holiday plans.
“I will never fly Kingfisher again,” Chadha said yesterday morning at Mumbai airport after arriving on a Jet Airways (India) Ltd. (JETIN) flight from Kolkata. Chadha, who works for a management consultancy in Mumbai, had been due to fly back a day earlier with Kingfisher. Instead, he said he canceled the trip after repeated delays and spent the night in a hotel.
Kingfisher flights were disrupted late March 7 after Hindustan Petroleum Corp. (HPCL) suspended fuel deliveries because of overdue payments. Supplies resumed yesterday, a national holiday. The Bangalore-based company was also kicked out of the International Air Transport Association clearing system for airlines and settlement systems with travel and cargo agents this week after missing payments and cash requirements.
The carrier has plunged to fifth from second in Indian market share since October as flight cuts, service disruptions and unpaid pilots’ wages deter travelers. The carrier flew 35 percent fewer passengers in December than June, compared with increases for Jet’s main unit and budget carriers IndiGo and SpiceJet Ltd. (SJET), based on the latest data from the regulator.
“Everyday something new goes wrong with Kingfisher,” said Tushar Ray, an information-technology consultant for a mobile- phone company, after arriving yesterday in Mumbai from Bhubaneshwar on an IndiGo flight. “I would rather take any other airline.”
Ray said he would pay as much as 1,000 rupees ($20) more for an alternative to a Kingfisher ticket. A frequent traveler to the Middle East, he usually looks for the cheapest fare, he said. Chadha, who had his holiday spoiled, said his employer had stopped using Kingfisher because of the disruptions.
Flights continue to operate normally, Prakash Mirpuri, a spokesman at Kingfisher, said in a statement today. Five flights from Mumbai were delayed on March 7 and one to Singapore was canceled, according to Mumbai International Airport Ltd. spokesman Mannik Nangia.
The airline said in its statement that it is working to regain access to bank accounts frozen by tax authorities. This was the reason for the “temporary” disruption in payments and cash deposit requirements of IATA systems, it said. The carrier, which was also suspended earlier this year, can rejoin when it meets requirements, IATA said in a statement today.
Kingfisher has been seeking new funds and investment since at least November when it cut 12 percent of flights and shut a budget unit in a bid to end losses. The carrier has been unprofitable for more than 10 straight quarters because of price wars, competition from state-backed Air India and fuel costs.
The airline further pared services to 175 flights a day last month as less than half of its 64 planes are in operation, E.K. Bharat Bhushan, the head of the Directorate General of Civil Aviation, said Feb. 21, after a meeting with the carrier’s management.
The carrier filled 70.2 percent of seats in January, the lowest amount among seven airlines tracked by the regulator. It also had the biggest decline in load factor from December, with an 8.1 percentage-point drop.
Management has also asked pilots not to walk out because of late salaries. It pledged to make payments as soon as possible, according to a March 4 statement.
Work Without Pay
“I’m quite worried about the fact that the pilots haven’t been paid,” said Eva Santi Sharma, a Canadian-born therapist and painter, as she waited yesterday in Mumbai for a flight to Goa that had been delayed from the previous day. “How can they work without pay?”
The carrier has plunged 49 percent in the past year in Mumbai trading. The stock fell 0.2 percent to 21 rupees, the lowest since Jan. 10, at close of trading in the city today. Its loss in the quarter ended Dec. 31 widened to 4.44 billion rupees from 2.54 billion rupees a year earlier.
“Once airlines nosedive, it takes too long for them to come back up,” said P.C.K. Ravindran, chairman of Kochi, south India-based Institute of Applied Aviation Management, and an adviser on aviation projects. “It’s a million-dollar question when they’ll be able to revive.”
Mallya, who has built a $1 billion fortune, according to Forbes, on the back of brewing India’s most popular beer, is looking to premium services to help retain customers. The carrier shuttered its budget unit to focus on most lucrative full-fare passengers.
“The service is good,” Deepak Nair, a doctor at medical college in Indore, Madhya Pradesh, said yesterday at Mumbai Airport, while waiting for a connecting flight to Kochi. He said he would have taken his trip with Kingfisher if he hadn’t had to travel urgently because of his wife giving birth.
“If I didn’t have to rush, I would choose Kingfisher,” he said. “It’s only because of the cancellations that I decided to buy a Jet ticket.”
Sharma, the therapist and painter, said she thought that the cash crunch had affected service standards, as she tried to find out information about her delayed flight to Goa. That had contributed to her trying out GoAir and Jet recently, she said.
“I used to be very happy with Kingfisher,” she said. “If Kingfisher is having problems, they should take care of the remaining passengers who chose to fly with them, rather than treat them so badly.”
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