New Delhi: Airports Authority of India (AAI), the country’s regulator of airports, has asked Kingfisher Airlines Ltd to bring down, before the end of this fiscal year, its overall dues for use of airports within the limits of bank guarantees it has furnished for use of them.
Meanwhile, at least one state-owned oil firm has started denying the airline purchase of jet fuel on credit.
If Kingfisher does not meet the AAI deadline, it may be asked to use airports and the authority’s aeronautical services on a pay-per-use basis (also called cash and carry) with no credit facilities, a senior government official said.
Last year, low-fare carrier SpiceJet Ltd had been shifted to such a model under a funds crunch, but no airline currently operates on such a basis.
After defaulting on payments overdue to AAI in November, when dues totalled up to Rs286 crore, Mumbai-based Kingfisher gave the authority post-dated cheques after the regulator threatened to encash its bank guarantees, a senior civil aviation ministry official had told Mint then.
Debt burden: Kingfisher Airlines had defaulted on payments overdue to AAI in November, when dues totalled up to Rs286 crore. Ramesh Pathania / Mint
But, the airline still owes about Rs150 crore to AAI, the senior government official quoted above said. Both he and the aviation ministry official did not want to be identified. “(Kingfisher is) requesting for another grace period,” the government official said. “We have asked them to progressively bring down their dues below their bank guarantee of Rs100 crore by 31 March.”
AAI manages all of the country’s civilian airspace and charges for aeronautical services it provides as also runs most of India’s airports.
Cash-strapped domestic airlines together owe at least Rs1,000 crore to AAI for these aeronautical services as of last week, this government official said. This sum includes nearly Rs700 crore from state-run National Aviation Co. of India Ltd-run Air India besides Rs150 crore by Kingfisher, the highest by any private airline firm.
In an unrelated development, Indian Oil Corp. Ltd has moved Kingfisher already to a cash and carry model after the airline could not meet payments for jet fuel purchases on time.
This followed delayed payments in instalments of dues, as agreed to by the airline firms in November when they had agreed to clear a cumulative Rs2,962 crore in payments owed to the oil firms in six equal tranches ending March.
Kingfisher, which has defaulted on those instalments, owed oil firms Rs744.92 crore as of 31 December, minister of state for petroleum and natural gas, Dinsha Patel told Parliament on Tuesday.
Mint could not immediately ascertain how many of those instalments the airline had missed. Together with other airlines such as Jet Airways (India) Ltd and Air India, the total amount due to the oil firms is Rs2,241 crore.
A Kingfisher spokesman denied the company was on a cash and carry arrangement with the oil firms and declined comment on payments due to AAI. “This is a matter we work out with our vendors and partners and as a matter of policy we do not discuss it in public,” he told Mint on Tuesday.
An expert said it was ironical that the civil aviation ministry was increasing airport charges for airlines even as dues were mounting and airlines were finding it difficult to pay for their operations. “Will the airlines be able to pay the enhanced charges,” asked Robey Lal, former India head of trade body International Air Transport Association.
Lal said government must assess whether some airlines have expanded too fast to be able to cope with financial commitments.