At least 34 flights across the country, including nine flights to and from Delhi, and those to Bangkok from Delhi and Mumbai were cancelled.
Airline officials maintained these were planned cancellations and such an exercise would continue "for a limited period".
At least six turboprop ATR-72 aircraft have been grounded as jet fuel supplies were stopped by state-run HPCL as the airline owes about Rs 600 crore to it, aviation sources said.
The BPCL is also not supplying fuel to the airline following an ongoing court case over alleged non-payment of about Rs 250 crore dues.
Indian Oil Corporation has stopped credit to the airline and put it on a cash-and-carry mode, implying that it would have to pay for fuel on a daily basis.
In a statement, the airline said it has "reduced frequency on some of its flights, which are predominantly over weekends or on some routes where there has been slow demand."
"For a limited period, these flights are either being cancelled or clubbed with other Kingfisher flights in a well- controlled pre-determined manner," the statement said.
The Kingfisher statement said "in continuation of our earlier announcement to focus on the full-service market, KFA has initiated reconfiguration of its aircraft.
"This exercise will require few of our aircraft to be out of service for the next few weeks, requiring a temporary modification of some of the flight schedules. Once the reconfiguration is complete, these aircraft will be pressed back into service immediately," it said.
"This initiative is expected to result in improved operational flexibility and revenue productivity of our network, and is in line with our stated intent and commercial strategy going forward.
"We would like to once again reiterate that there will not be any significant change to the network of 50 plus cities being served by Kingfisher Airlines," it said, adding that the move was "taken in a planned manner and in close coordination with our travel partners and guest relations teams to avoid any inconvenience that may be caused to our guests."
It said passengers, scheduled to travel on flights which have been cancelled, would be accommodated on alternate flights or on other airlines.
Kingfisher has suffered a loss of Rs 1027 crore in 2010-11 and has a debt of Rs 7057 crore.
Aviation sources said the number of flights to be cancelled and the number of aircraft to be grounded could go up further in the next few days.
The airline's schedules were disrupted last month also due to the same default on payments to oil companies, Airports Authority of India and other agencies.
The sources said the airline was also facing shortage of pilots and cabin crew members with some of them putting in their papers or failing to report for duty during the last few days.