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Corporate Oct 16, 2012

Will govt wait until Dec to act on Kingfisher licence?

By Rajesh Pandathil

Is Kingfisher Airlines alive or dead?

Do not expect a clear answer to this question for a few more months, though the government is seeking legal views on cancelling the flying licence of the airline.

A report in Mint says one way out for the government in the Kingfisher imbroglio is to wait until 31 December when the licence will come up before the regulator DGCA for renewal.

This will be a less "acrimonious" route, said the report quoting an expert.

Is Kingfisher Airlines alive or dead?

"If they cancel Kingfisher's licence, why not Air India's?" Shakti Lumba, a former vice-president at IndiGo and a former head of Air India Ltd's subsidiary Alliance Air, has been quoted as saying in the report. Air India is running on taxpayers' money too.

He is of the opinion the government may make the licence renewal for Kingfisher more conditional-like seeking a no-objection letter from the lenders-which might effectively mean cancelling it.

Interestingly, if the authorities are refraining from taking a hard decision on the airline for fear of a spurt in ticket charges, the damage is already done.

Airlines have already increased the fares, to cash in on the situation.

A round trip to Delhi, Kolkata or Lucknow is costing up to Rs 15,000 during the festival season, according to a Times of India report on Sunday.

The fares have even touched Rs 17,000 one way, the report said.

According to a report from Bank of America Merrill Lynch, Kingfisher's so-called temporary shutdown has been positive for other airlines.

They are not planning to increase capacity despite this being a busy season.

"Indian carriers are not renewing the expired leases and also sub-leasing aircrafts in order to keep the capacity under check," a note from the brokerage said.

"As per our channel checks, over the next 3 months, we expect addition of 5-6 aircraft, most of which will be utilised in the underserved international routes," it said.

So, there is no reason for the authorities to dither on this count.

Meanwhile, the staff's worries have taken an even curious turn. The income tax department has now raised a tax demand on them, who have been waiting for the management to pay the seven-month salary dues, an Economic Times report said.

This is further putting stress on staff.

The demand has been raised as the management has failed to deposit the tax deducted from the salary.

The tax demand is a double whammy for the employees.

"Outstanding tax deduction is ultimately the responsibility of employees, who needs to clear the dues," a tax official has been quoted as saying in the ET report.

This despite knowing that the company has about Rs 300 crore as dues to the income tax department.

The company has not even given the Form 16 to the staff from 2009, the ET report said.

In other words, the employees are being made to pay for the mistakes of the management.

Now, we have to say: This happens only in India.

by Rajesh Pandathil

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