The International Air Transport Association (IATA) has suspended India’s Kingfisher Airlines from its account settlement system due to non-payment of fees, dealing a fresh blow to the carrier as it seeks funds to stay aloft.
The industry group’s clearing house, ICH, settles accounts between the world’s airlines, airline-associated companies and travel agencies.
“Kingfisher’s participation in the ICH will be reinstated after the airline fulfils the ICH requirements,” IATA spokesman Albert Tjoeng said in an email. Kingfisher can still partner with other airlines by settling with them directly, he said.
About 240 airlines, representing about 84 percent of global scheduled airline traffic, belong to IATA.
Kingfisher said it could not settle the dues as its bank accounts have been frozen by tax authorities, the same reason the company gave when it had to cancel most of its fights last month.
Of the 64 planes in its fleet, Kingfisher is now using just 28, disrupting the travel plans of thousands of passengers across the country.
The company is in talks with tax authorities and expects its bank accounts to be reactivated shortly, the carrier said in a statement.
“Kingfisher Airlines continues to operate 200 flights to 46 domestic and international destinations. The ICH suspension does not impact our guests travelling on any Kingfisher Airlines flight or our flight schedules,” the statement said.
Kingfisher, headed by drinks tycoon Vijay Mallya, has never made a profit since it was founded in 2005.
Adding to Kingfisher’s troubles, CNBC-TV18 reported that Indian tax authorities had issued “show-cause” notices to the airline’s senior management, asking them to explain why the airline had not paid about INR3 billion rupees (USD$60 million) of tax.
Kingfisher has 10 days to respond, the TV channel said.
The airline, which has a debt of about USD$1.3 billion, needs at least USD$400 million soon to keep flying, according to the Centre for Asia Pacific Aviation, an industry consultancy.