Mumbai: Crisis-hit Kingfisher airlines on Saturday questioned whether it was the private carrier's duty to fly on loss-making routes, even as Government said there is no move to bail out the airline which has cancelled 210 flights in six days.

Kingfisher seeks government bailout

Kingfisher owner Vijay Mallya while blaming the system of airlines in the country being overtaxed and overcharged also said governments abroad have "gone out of the way" to support air carriers and connectivity.

With 50 more flights being cancelled, the beleaguered airline has cancelled 210 flights since Monday putting hundreds of passengers to inconvenience.

"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," Civil Aviation Minister Vayalar Ravi said in a statement.

Ravi's clarification came against the backdrop of Opposition flak over his statement that he would talk to the Finance Ministry to see whether banks and oil firms could provide some relief to the cash-strapped airline.

On the other hand, Mallya, who had earlier this week sought government help, tweeted: "Every government has gone out of the way to support airlines and connectivity. In India airlines are overtaxed and overcharged. Wonder why?"

In another tweet, he posed: "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".

Official sources said while no bailout was being given by the government to Kingfisher, it was free to approach the concerned ministries on issues concerning soft loans and for restoration of the credit line from oil PSUs for the uplift of jet fuel.

Kingfisher CEO Sanjay Aggarwal said the airline has not made any bailout request to the government but admitted "we have only asked our banks for an increase in limits due to
significant increase in operating costs caused by increase in fuel prices and rupee devaluation." Kingfisher officials were today closeted with their legal and financial advisors and its lenders began deliberations to consider if the struggling airline's debt could be restructured.

Overall, banks, including SBI, ICICI Bank, IDBI Bank and Punjab National Bank, have an exposure of Rs 7,700 crore to the airline.

Kingfisher is understood to have sought about Rs 300 crore of funded limit and a similar amount to secure Letters of Credit and bank guarantees. It is also believed to be seeking soft payment options from oil companies for jet fuel.

The stocks of the airline had on Friday plunged to an all-time low to 19.1 per cent in early trading on the Bombay Stock Exchange to a record low before recovering to 9.45 percent. The airline has suffered a loss of Rs 1,027 crore in 2010-11 and has a mounting debt of Rs 7057.08 crore.

Aviation regulator DGCA asked the carrier to give details of their plan to reconfigure its fleet to prevent a large-scale flight disruption as it had found that Kingfisher was not operating flights as per the approved winter schedule.

DGCA chief E K Bharat Bhushan also warned that if the airlines were found not operating the slots allotted to them, these will be given to others who are willing to operate "regardless of who it is".

Thousands of passengers across the country cancelled Kingfisher flight tickets to travel by other airlines, though after paying 20-40 per cent higher at the last moment.

Though the airline had earlier maintained that flight operations would normalise after November 19, reconfiguration of its planes to add business class seats would require up to
three aircraft to be out of service over the next three months at any one time for this exercise to be completed.

"It will reduce the number of fleet configurations from 7 to 3, improving operational flexibility. This initiative will add more seats to the fleet, improving revenue production of
each aircraft," Kingfisher CEO Sanjay Aggarwal said.

Aggarwal had earlier said, "We decided to reduce frequency on some of the routes where we had multiple flights like Delhi-Mumbai or low passenger load like Nanded-Mysore. This is part of route rationalisation to improve profitability and revenue productivity of the flights".

Industry sources said the lessors of Kingfisher's leased turboprop ATR aircraft fleet have put the airline on notice and want urgent payments for the lease.

The cash-strapped carrier also has unpaid dues to the operators of airports and other agencies, which have also been putting pressure on it to expedite payment.

As Kingfisher's banks started deliberations on its debt restructuring for the second time, sources said this could lead to downgrading of its asset classification to the non-performing category which the lenders were wary of.

The sources said the airline not only required reduction in interest rates or re-phasing of loan, but additional funds, which has to be provided by the promoter himself.

Kingfisher sends email apology

Kingfisher Airlines has sent an email to its frequent flyer club members to explain the reasons for cancellation of numerous flights, asserting that the move was necessary to reconfigure its aircraft to focus on the full-service market.

In the email sent to 'King Club' members on Saturday, Kingfisher Airlines Vice-President (Guest Loyalty) Anshu Sarin noted, "We have decided to focus on the full-service market; to this end, Kingfisher Airlines has initiated reconfiguration of its aircraft. This exercise will require few of our aircraft to be out of service for the next few weeks."

"In line with maximising productivity, we have rationalised our network, resulting in a temporary discontinuation of approximately 50 flights out of our current operating schedule of approximately 350 departures per day.

Once the reconfiguration is complete, these aircraft will be pressed back into service immediately," she added.

Dismissing news reports, Sarin also said, "The report about our flights being cancelled owing to the supposed exodus of pilots appears to be falsified."

"The Indian Aviation Industry has been faced with the difficult task of coping with high costs and lower yields. After considerable thought and deliberation, Kingfisher Airlines has rolled out initiatives that aim to drive long-term profitability in our efforts to meet these challenges," the vice-president said.

Stating that the airline's service commitment to passengers remained sacrosanct, Sarin said every measure has been taken to reduce any inconvenience caused due to the temporary changes in schedule.

"Please accept my sincere apologies in case you have been inconvenienced on this account; I truly appreciate your support and thank you for your understanding," Sarin said.

(JPN/Bureau)