Advertisement

  • News
  • Columns
  • Interviews
  • BW Communities
  • Events
  • BW TV
  • Subscribe to Print
  • Editorial Calendar 19-20
BW Businessworld

That’s My Engine There

Photo Credit :

The whole Kingfisher story has now become quite a joke in Indian aviation circles. As the endgame plays out, people are no longer concerned with the airline’s revival; in fact, they are watching various facets of this saga unfold with much bemusement.
 
The airline submitted a revival plan to the Directorate General of Civil Aviation (DGCA) recently, which was described by authorities as “laughable” and dismissed by all. According to a top DGCA official, the new proposal was not even worth considering since the airline was yet to pay most of its dues of around Rs 330 crore to the Airports Authority of India (AAI). The line of the rest of its creditors is longer than anyone cares to elaborate.
 
After Kingfisher’s licence was scrapped, DGCA moved quickly and deregistered 19 of the airline’s aircraft. There remained, however, the little matter of the aircraft leased to KFA. The airport authorities barred the lessors from flying those planes unless KFA settled its dues. But a meeting called by DGCA convinced them that they had little choice in the matter. The lessors could hardly pay for the wrongs of the airline. The aircraft, it was explained, belonged to the lessors and that authorities could take legal recourse against KFA, but they needed to first release the planes. 
 
But most of these planes have now been lying around for many months and are not in air worthy condition. Getting them back into flying condition is no easy task. According to sources, MRO (maintenance, repair and overhaul) estimates suggest investments of Rs 50-60 crore in some cases. Also, since parts from some of the grounded aircraft were used to keep other planes flying, it is now proving a challenge to get all the parts of the same aircraft together, says a government source. “So quite often, you have lessors telling each other, ‘Hey that’s my engine or my tyre — give it back’, he adds. While all this may have a funny side to it, the collapse of the airline is far from being so and the government needs to seriously think about it for the 
following reasons:
 
One, foreign lessors are now wary of leasing or lending to Indian carriers and conditions are inevitably going to be tougher. The Kingfisher episode, according to many industry CEOs, has become quite an embarrassment for them. It has stretched way longer than it should have, primarily because Vijay Mallya wants to rid himself of the personal guarantees he has given for the airline’s liabilities. Some of these could even result in his imprisonment, according to top civil aviation ministry officials — they argue that if cabinet ministers can go to jail, Mallya could as well find himself in a similar predicament.
 
Finance minister P. Chidambaram woke up one morning and mumbled that it was unacceptable that there were rich promoters and sick companies. This helped the public sector banks to suddenly find their voices. But I would be surprised if Mallya ever finds himself being prosecuted by any authority for the default of his company.
 
Then, some kind of redressal for employees’ grievances is needed. Their dues need to be settled. Why should they pay for the mistakes of their management and promoter? In my opinion, it is only fair that their dues are settled by conducting a sale of Mallya’s personal assets. 
 
Although it may be expecting a little too much from a businessman, it wouldn’t hurt if Mallya showed some restraint in his lifestyle considering how much his airline employees have had to suffer over the past two years. The ‘King of Good Times’ and his son continue to fly around the country to watch and cheer their IPL team even as their airline remains firmly grounded and its employees remain unpaid. No one appears to have noticed that Mallya seems to have no shortage of cash — even if his airline company is more than bankrupt. 

anjulibhargava(at)gmail(dot)com

(This story was published in BW | Businessworld Issue Dated 01-07-2013)