Kingfisher Airlines: A Fraud Chapter !

July 05, 2016 16:07
Kingfisher Airlines: A Fraud Chapter !

Do you remember Kingfisher Airlines? It is the same airlines which got shut down due to the financial crisis. Kingfisher airlines were established in the year 2003. It is owned by the Bengaluru-based United Breweries Group.

The airline started commercial operations on 9 May 2005 with a fleet of four new Airbus A320-200s operating a flight from Mumbai to Delhi.

It started its international operations on 3 September 2008 by connecting Bengaluru with London. Kingfisher's head office is located in Kingfisher House Western Express Highway Vile Parle Mumbai.

Its registered office is located in UB City, Bangalore. The head office was previously in the Kingfisher House in Vile Parle Mumbai. In 2012 Vijay Mallya was trying to sell the Vile Parle Kingfisher House.

Vijay Mallya
The airline had shut down its operations on 20 October 2012 when DGCA suspended its flying license. This suspension was due to failure to give an effective response to the show-cause notice issued by DGCA.

However, the airline had locked out its employees for several days before this suspension. On 25 October 2012, the employees agreed to return to work.

The crisis started with the freezing of the bank accounts of the airline by the Indian Income Tax Department. In November 2010, Kingfisher Airlines completed the restructuring of ₹8,000 crore debt, with all 18 lenders agreeing to cut interest rates and convert part of loans to equity.

Kingfisher Airlines delayed salaries of its employees from October 2011 to January 2012. In a report to Directorate General of Civil Aviation (DGCA) on 9 January 2012, Kingfisher had stated that it has paid past (salary) dues to 60% of its employees and that by 31 January 2012, payment of December 2011 salary for all its employees will be done.

Staff Protest
Protesting at the delays in payment, Kingfisher pilots started making in-flight announcements citing "It is their sense of duty towards the guest that is making them fly despite not being paid salaries for the past two months".

It reportedly missed the deadline set by the board and could not pay the dues until the evening on 29 February. This led to more accounts being frozen.

The airline neither did comment on the situation nor pay the taxes. Aviation minister Ajit Singh warned the airline about the temporary suspension of the license until the crisis was sorted out. He announced that the rest of the airline's fleet would be grounded and all flights cancelled until the crisis came to an end.

On 7 March 2012, IATA suspended ticket sales of Kingfisher Airlines citing non-payment of dues as the primary reason, and they said that sales services will only be restored once Kingfisher settles ICH account.

IATA also immediately directed all travel agents to stop booking tickets for Kingfisher. Soon it became difficult for the airline to follow the much smaller schedule that it earlier released as even more, pilots began to go on strike.

Counter closed
On 12 October 2012, an income tax court in Hyderabad issued a non-bailable warrant against Kingfisher Airlines and its chairman Vijay Mallya in a case of 'bouncing' cheques filed by GMR Hyderabad International Airport Ltd (GHIAL).

The case pertains to bouncing of cheques worth Rs 100 million issued by Kingfisher Airlines to GMR as Hyderabad airport charges. GMR Hyderabad International Airport Ltd, which manages the Rajiv Gandhi International Airport, had earlier moved the Nampally criminal court in Hyderabad and filed a case against Kingfisher for dishonouring four cheques worth Rs 105 million.

The Hyderabad court on Tuesday adjourned the hearing of the-the Kingfisher cheque bounce case till August 4.

Before on June 6 the court had adjourned the hearing of the case for today but again the case got postponed.

On April 20, the Special Magistrate Court in Hyderabad had convicted Mallya and others in connection with the bouncing off two cheques of Rs. 50 lakh each under relevant Sections of Negotiable Instruments Act and adjourned for May 9 the matter to pronounce the quantum of punishment as Mallya, who left the country, was not present in the court.

Also Read: Kingfisher Cheque Bounce Case Adjourned till August 4

By M. Divya Shri

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Kingfisher  Airlines  Case