Kingfisher down, air fares up - TeluguPeople.com News

Hyderabad: Even as Vijay Mallya is struggling to keep Kingfisher flying, Neeraj Monga, executive vice president and head of research at Veritas Investment, said Kingfisher Airlines was a bankrupt organisation. 'It has been trying hard to raise money via every means possible,' he added.

With its losses mounting, Kingfisher Airlines has been struggling to foot its fuel bills, which led to dozens of flights being grounded on a daily basis. On Sunday it cancelled 40 more flights taking the total number of cancelled services to 250 in one week.

Monga said the airline had been burning cash at a rapid rate. 'Nearly 23% of the airline is owned by banks,' he said adding, 'UB Holding needs to find rights issue externally.'

The company has got shareholder approval for a Rs 2,000 crore rights issue. Mallya said the previously approved GDR issue could not be launched due to various external environmental factors such as the high crude oil prices.

With most of the Kingfisher flights being cancelled, other airlines have opted for repricing their airfares to make up for what they have been losing on their loss making operations. Some of the airlines had enhanced the fares rather abnormally during the past two days.

According to reports besides the inconvenienced caused by the cancellation of flights, some passengers even paid a premium of 30-40 per cent to travel by other flights. A passenger has to pay as much as Rs 20,000-23,000 for a one-way Delhi-Mumbai flight due to fewer flights.

Before Kingfisher Airlines stopped flights, the average economy fare for a Delhi-Mumbai flight was between Rs 6,000 and Rs 7,000.

Travel agents say fares on Air India are between Rs 12,000 and Rs 20,000, depending on the time slot, between Rs 12,500 and Rs 19,000 on full service Jet Airways and around Rs 13,000 on the budget carrier IndiGo.

Spot fares have also risen between Delhi and Bangalore to over Rs 16,000. The Mumbai and Bangalore sector has seen spot fares going up to Rs 14,000.

Consequent to the increase in the fares, those flying from Hyderabad to New Delhi on November 14 would be paying an unusually high price, ranging from 20 to 25 per cent.

The fare charged by different airlines in the section is ' Air India - Rs 6751, IndiGo ' Rs 6751, Jet Airways ' Rs 11,735, Jet Connect ' Rs 7485, Jet Lite Rs 6751, Jet Lite Codeshare -Rs 6751, Kingfisher and Kingfisher Class Rs 7701, Multiple Airlines Rs 11,187, Spicejet Rs 6751 and Jet Airways- Rs 13,085.

Different airlines were flying people for a song in this section till recently as part of their predatory pricing policies, which of course proved costly.

Most of the travel agents have stopped taking bookings for Kingfisher as they do not know whether the flights operate or not. There are a lot of cancellations and the passengers are opting for other airlines.

The beleaguered airlines would have to wait some more time for relief as its lenders continued deliberations on Sunday towards resolving the crisis, a day after Prime Minister Manmohan Singh said the government would explore ways to help the private carrier.

Bankers of Kingfisher, who met in Mumbai on Saturday , are holding more rounds of talks on its debt restructuring. Kingfisher is looking for additional working capital to tide over its severe cash crunch.

Kingfisher has approached lender-banks for a reappraisal of working capital requirements following a surge in price of jet fuel in recent months.

Civil Aviation Minister Vayalar Ravi has ruled out any bailout package for the airlines but said efforts would be made to help the ailing aviation industry.

Asked whether the government had decided on allowing FDI by foreign airlines in India, Ravi told reporters, "it is not a matter to be decided in a day.

The proposal may come and then it will be considered.' Kingfisher promoter Vijay Mallya is making a strong pitch for allowing foreign airlines to pick up stakes in Indian carriers.

Ravi, who is leaving for Bahrain on a three-day visit from Monday , said he hadn't yet met the Prime Minister on problems faced by Kingfisher and the aviation industry.

The Prime Minister, while returning from the Maldives, told reporters, "we will explore ways and means in which the airlines can be helped.

At the' same time, he said private airlines should be managed efficiently, "but if they do get into difficulties, we have to find ways and means to help them get out of the process."

Meanwhile, industry sources said the 13-bank consortium, led by the State Bank of India that has lent to Kingfisher, are not yet ready to provide a bailout package for the debt-ridden company.

After the first round of meeting on Saturday, the banks have asked the airline promoters to put more equity into the venture and disclose additional financial details to them.

A core bankers' committee has also been set up to vet the additional financial details to be provided by the airline management over the next few days, the sources said. The bank representatives would meet their respective managements to take a call on the future course of action, the sources said.

Besides SBI, the consortium includes ICICI Bank, IDBI Bank, Punjab National Bank, Bank of Baroda, Bank of India, UCO Bank, Oriental Bank of Commerce and State Bank of Mysore. Together, these banks now hold a 23.4 per cent stake in the airlines and have an exposure of over Rs 7,700 crore.

ICICI chief Chanda Kochhar said her bank's exposure in the troubled airline was very less and there were no overdues. The airline has suffered a loss of Rs 1,027 crore in 2010-11.