Clear all dues before seeking licence renewal: DGCA to KFA

PressTrust of India  |  Mumbai  March 10, 2013 Last Updated at 16:44 IST

The airline management has repeatedly failed to act on its promise to clear the salary dues of its employees

Aviation regulator DGCA wants grounded Kingfisher Airlines to clear all dues, including pending salaries of employees, before taking up for consideration its application for renewal of flying licence.

"The airline (KFA) has been promising to pay salary dues to its employees since the last six months, but has not done so. Moreover, the renewal of Kingfisher Airlines' air operator permit (AOP) is not only linked to the unpaid staff wages, but also to the massive dues towards its vendors and lessors," DGCA sources said here.

"So we have to take into consideration all these dues before accepting the airline's application for licence renewal," they said, adding the airline needs to come up with a credible revival plan, which should include commitment to clear dues of all stakeholders.

The regulator's apprehension stems from the fact the airline management has repeatedly failed to act on its promise to clear the salary dues of its employees, who have not been paid since June last year, the sources said.

Last week, KFA Chief Executive Sanjay Aggarwal met the DGCA officials in a bid to get the AOP renewed.

The private airline, grounded since October last year, lost its flying permit in December though it has a two-year window to get it renewed.

The KFA-DGCA meeting came amidst report that the Civil Aviation Ministry was likely to auction the Vijay Mallya-led carrier's domestic slots and international flying rights to other Indian airlines.

Naresh Goyal-promoted Jet Airways' application seeking KFA slots is already pending with the Ministry.

Aggarwal reportedly told the watchdog that the airline was awaiting proceeds from the UB Group's deal with UK firm Diageo to clear salary dues. The Group has sold 53.4% stake in United Spirits to Diageo for about $2 billion.

He also requested the Government to keep aside some of the slots, including those at Mumbai and Delhi airports, of KFA so that they can be used once the airline resumes flights.

KFA, which started operations in 2005, is reeling under debts of about Rs 8,000 crore and a similar amount of accumulated loss. Last month, KFA lenders decided to start the process of recovering Rs 7,500 crore outstanding loans from the airline.