Mallya blames govt for mess

High taxes and mandatory flights on uneconomic routes sank the airline
Last Updated 12 November 2011, 20:27 IST

Mallya, who is understood to be in Abu Dhabi to watch the Formula One event to be held on Sunday – he owns team Force India – tweeted whether it was the carrier’s duty to fly loss-making routes even as he raked up the issue of state governments taxing the airlines heavily.

Rubbing it on the government further, he praised the governments abroad which he said have gone out of their way to support their ailing airlines.

Kingfisher, which has drawn the ire of the passengers as well as the government for unilaterally cancelling about 50 flights a day for the last six days, questioned: “Is it Kingfisher’s duty 2 fly on loss making routes when State Governments tax heavily? Or should v be financially prudent n fly profitably?” “Every Government has gone out of the way to support Airlines and connectivity. In India Airlines are over taxed and over charged. Wonder why?”

As per the states’ taxation policy, the aviation turbine fuel consumed by the airlines are taxed substantially. The Centre had been urging the states to reduce the ATF taxes but with little success.

The carrier, whose stock prices have tanked, plunging as much as 18 per cent to an all-time low on Friday as investors fretted about the viability of the carrier, has already withdrawn flights on most of the non-viable routes, especially those operated by its fleet of turboprop aircraft.

Under the government's policy, it is mandatory for the airlines to fly on these socially backward destinations which include sectors such as those to North-East, Jammu and Kashmir etc. As the airline slipped further into the red, its lending bankers met in Bangalore on Saturday to assess the situation. It is, however, learnt that they made no commitment to lend more money to the cash-stripped carrier.

The airline, which recently closed down its low-cost operations, has an accumulated loss of Rs 5,348 crore at the end of 2010-11 and needs cash urgently to pay for the fuel and airport fees to keep its aircraft flying.

Even as the airline struggled to stay afloat, the government clarified that there was no bailout package on its table for the ailing carrier. Civil Aviation Minister Vayalar Ravi, to whom Mallya was said to have talked to on Thursday last, said in a statement: “It has been reported in certain sections of media that a bailout package has been proposed by the government. This information has been attributed to me as the Minister for Civil Aviation. This is to clarify that no such bailout package is pending before the government nor has been proposed by Ministry of Civil Aviation for the Kingfisher Airlines.”

(Published 12 November 2011, 08:46 IST)

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