Adding to passengers’ woes, cash-strapped Kingfisher airlines grounded over a dozen flights as its employees agitated over salary issues on Monday, a day when President Pratibha Patil promised the UPA government would take steps to protect air travellers’ interests and make a law to this effect.
Problems for India’s largest private carrier Jet Airways also came to the fore with the revenue officials asking the International Air Transport Association (IATA) to remit the carrier’s service tax dues of Rs 69 crore to the tax officials before settling Jet’s bills. Jet had said it would clear the dues by Monday.
The Service Tax Department’s action implies that the IATA would first deduct the payments due to the department before settling the Jet account.
Meanwhile, Kingfisher said it had to cancel flights due to employees’ agitation on account of delayed payment of salaries. In a statement, the Airline said, it operated 145 flights on Monday. The airline operated as many as 400 flights per day six months ago.
“The flight loads have reduced because of our limited distribution ability caused by the IATA suspension,” Kingfisher said.
“This situation has arisen as a consequence of our bank accounts having been frozen by the tax authorities. We are making all possible efforts to remedy this temporary situation,” the airline said.
Kingfisher’s bank accounts were frozen last month following which it was suspended from three of the IATA’s settlement system.
Aviation experts said the freezing of accounts has made it difficult for the airline to procure fresh funds from banks, which are insisting its promoters to infuse fresh equity in the company before asking for a bank bail-out.
The beleaguered airline, which has a total debt of about Rs 7,057 crore and accumulated losses of about Rs 6,000 crore, also owes to the government over Rs 130 crore of income tax deducted from employee salaries.
According to sources, Kingfisher has lost over 300 pilots and many more staffers in recent months due to non-payment of their outstanding dues.
This year’s Budget is likely to give some succour to the struggling aviation sector in the form of a 49 per cent foreign direct investment in the aviation sector and other sops for their revival.
While the government has already allowed the debt-ridden industry to directly import jet fuel to help them curb their overshooting expenses on oil bills, the beleaguered airlines are seeking infrastructure status to the industry to lower the incidence of taxation.
The government is also expected to introduce a bill in Parliament this year to set up a Civil Aviation Authority to ensure safe, secure and affordable air services to passengers, the President said in her inaugural address in the Budget session of Parliament.
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