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Feb 21, 2012, 09.02 AM IST
Aviation minister Ajit Singh tells CNBC-TV18 that they are are helping Air India as it is a government concern. “The same can't be done with private players,” he says.
According to him Kingfisher will have to mobilise resources by itself. “The government can't give direct money to any private industry like Kingfisher,” Singh says. The company will need to present its business plan to banks to get money. “Also, we cannot go around asking banks to lend money,” Singh says. “Banks have to go by RBI guidelines and we cannot ask them to overlook NPAs,” he says.
A series of flight cancellations landed Kingfisher Airlines in trouble with the Director General of Civil Aviation (DGCA). The company on it’s part is saying that the cancellation is due to the Income Tax department freezing it’s bank accounts suddenly.
“Kingfisher and other airlines have been under financial stress for quite some time,” says the aviation minister. “But KFA did not inform the DGCA about flight cancellations as per rule,” he says. The DGCA report on KFA cancellations is awaited.
Talking about the government’s efforts to revive the sector, Singh says that the ministry has indeed taken several steps to improve the health of the airline sector. He brings to focus decisions such as direct import of air-turbine fuel (ATF) and the new bilateral policies that are set to benefit private airlines.
He says that several airlines are in touch with oil companies for ATF infrastructure especially for storage and transport facilities.
Below is part of the edited transcript of the interview. Also watch the accompanying videos fore the full interview.
Q: There are reports saying that the government is even going as far as to consider cancelling Kingfisher Airlines license. Is there any possibility of that happening?
A: They have cancelled many flights and according to the rules, they are to inform the DGCA beforehand which they haven’t done. DGCA has asked them to come and give their report. Unless we know what the situation is, how can we say we are going to cancel the license and how it would help? They are still operating some flights. You have to make sure they meet the safety standards. We want to make sure that Kingfisher would inform the DGCA beforehand, if they change any flight plan.
Q: Kingfisher Airline says that our teams have been in touch with the DGCA to keep them informed of the disruptions. You are saying that neither the Civil Aviation Ministry nor the DGCA had been informed by the airline about the possibility of disruptions. Are you saying the airline is not being truthful?
A: I am not saying that. DGCA is enquiring into that; let's wait until the report comes.
Q: KFA also says that the prime reason for the current disruptions in our flight schedule is the sudden attachment of our bank accounts by the IT Department. This is not the first time that Kingfisher Airlines has seen its bank accounts being frozen by the IT Department. Do you have any information about the dialogue, which Kingfisher says it has engaged in with the IT department, with the Finance Ministry, with regards to unfreezing its bank accounts?
A: Kingfisher and some other companies in aviation industry have been under financial stress for sometime and that also includes Air India. Some of the airlines haven't paid to the oil companies and airport authorities, so it is known beforehand. I read in the newspapers that Kingfisher has been negotiating with consortium of banks to get the working capital loan. So it is nothing new that they are under financial stress.
Q: Kingfisher Airlines says that the primary reason for the current disruptions is the fact that their bank accounts have been frozen suddenly by the IT Department. Is the Civil Aviation Ministry to alleviate the concerns as well as the inconvenience cause to the passengers willing to intervene and speak with the Finance Ministry for unfreezing of these bank accounts?
A: As I mentioned to you they are under financial stress. They haven't paid their employees for the last few months. They haven't paid the oil companies dues. They haven't paid the airport authorities dues. So it is not just a question of their account being frozen by the government and the DGCA is asking them to furnish all this information to them. Let us wait until DGCA comes back with a report.
Q: We have seen forward movement by the government allowing private carriers to import ATF directly, but a lot of these companies say because they don't have infrastructure in place and because the oil marketing companies are not willing to play ball, that this is not going to result in any kind of cost saving or cost efficiency on the part of the carriers?
A: As far as I know several aviation companies are in touch with the oil companies and they are working out arrangements for using their infrastructure.
s for the full interview.
Tags: Kingfisher, Air India, aviation ministry, debt restructuring, aviation sector, IT Department, DGCA, FDA in aviation, ATF import
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