by Lufthansa Flyer | Dec 20, 2011 | Industry News |
In a new development in the ongoing crisis of India’s Kingfisher Airlines, an Indian finance official has confirmed that Kingfisher has not been depositing the payroll taxes that it has been witholding from employee paychecks for the last 2 years.
If you missed my earlier post regarding Kingfisher’s challenges, you can read that post here
Here is the release as published by Reuters:
Cash-strapped Indian carrier Kingfisher Airlines has not deposited with the government most of the income tax it deducted from its employees’ salaries for the last two fiscal years, junior finance minister told parliament on Tuesday.
Kingfisher has about INR1.3 billion rupees (USD$24.6 million) of tax deducted at source (TDS) to be deposited with the government and has committed to pay it by the end of the current financial year to March 2012, S.S. Palanimanickam told parliament in a written reply.
“Survey has been conducted in case of Kingfisher Airlines, which revealed that the airline had not adhered to TDS provisions,” the minister said.
The government has initiated proceedings to recover the default amount, levy interest on delayed payment, and take further statutory actions, the minister said.
Earlier this month, tax officials had temporarily frozen 11 bank accounts of Kingfisher after the airline failed to pay service tax dues.
Debt-laden Kingfisher, which has been grounding planes and cutting routes to stay afloat, is scouting for funds and is negotiating with its lenders for INR7 billion rupees of working capital loans.
It has a current debt of about INR65 billion rupees to a consortium of banks led by State Bank of India.
The airline aims to cut debt to INR37 billion rupees through sale and lease back of aircraft, sale of a property in Mumbai and conversion of rupee loans into lower interest foreign loans.
Lenders to Kingfisher are awaiting a report on the airline’s viability before they approve a USD$133 million loan, sources told reporters on Monday.
(Reuters)
by Lufthansa Flyer | Dec 19, 2011 | Industry News |
Kingfisher has confirmed that it has grounded 15 aircraft indefinitely while it works with it’s banks to resolve an ongoing cash crunch. It also confirmed that India’s aviation regulator is conducting an ongoing financial review of the airline’s operations.
This announcement comes on the heels of an earlier announcement indicating that the India based carrier would be the country’s first airline to join a Global Alliance when it joins Oneworld next February.
At the time of this news, Indian conglomerate ‘Sahara’ plans to infuse $47 million dollars into the beleaguered carrier to help it sustain operations.
I’m Wondering if Oneworld is overly excited with Kingfisher at this point. Kingfisher has never been profitable, and has slipped to being the 3rd largest airline in India. Kingfisher claims that joining Oneworld will help it compete more effectively since joining Oneworld will add 40 new Indian destinations to its portfolio.
by Lufthansa Flyer | Dec 19, 2011 | Industry News |
If a certain Senator has her way, a bill that forces airlines to allow one free checked bag (within weight limits), free passenger access to drinking water and restrooms will become law.
Sen. Mary Landrieu (D-La.) hopes that her Airline BASICS Act would force Airlines to provide the services I mentioned above at no cost to passenger. The Bill would also require clearer disclosure of the various fees charged by airlines (that part I am supportive of).
I don’t know about you, but I don’t recall ever being charged for using a water fountain or for use of the restroom while on board or in an airport in the US or in most places around the world (there are a few exceptions in eastern Europe!). The Senator claims that air travel is already stressful and this bill will help reduce some of these stresses for passengers:
“When an airline advertises a flight, that is how much it should cost, plain and simple,” Landrieu said in a prepared statement. “Passengers should not be charged additional fees for checked or carry-on baggage, drinkable water or other reasonable requests. Air travel can be a stressful experience for many reasons, but unfair fees for basic amenities should not be one of them.”
In this blogger’s humble opinion, I think this is a very bad idea. The baggage fees that are being charged by airlines are one of the primary reasons airlines are able to survive what has become an extended recession for them. Only now are they starting to claw back to profitability after years of losses and bankruptcies that swept through the industry (and with AMR, we’re not done yet!).
This bill assumes that air travel is a right and not a privilege and that airlines need to sacrifice their viability in order to appease a loud minority of travelers. It doesn’t take into consideration that if airlines start to fail again, thousands upon thousands of jobs will again be lost in an economy that can ill afford to lose them. And does anyone think that fares will not rise dramatically in lieu of free checked baggage?
Airlines will collect approximate $3 billion in baggage fees alone this year. $3 billion that is very much the difference between survival and failure of the industry. It’s one thing for Washington to protect travelers against excessive delays as provided for in the Passenger Bill of Rights, but it’s a completely different matter to let Washington dictate to an airline how it generates it’s revenue.
While I respect the Senator’s right to propose legislation, I have to strongly disagree with this piece. It is shortsighted with tremendous potential for unintended consequences. I would suggest to the Senator to allow the dynamics of a free market society to run its course. If passengers don’t like the fees, no one is forcing them to board an airliner. As it stands now, $3 billion dollars of passenger money is voluntarily flowing to the airlines for checked baggage suggesting an acceptance of current fee structures that are in place.
As you can sense, I have a fairly strong opinion on this topic, and it’s only my opinion. I would like to hear what you think.
