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Govt may not let Kingfisher shut shop

Last updated on: February 24, 2012 10:52 IST

Govt may not let Kingfisher shut shop

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BS Reporters in New Delhi/Bangalore

The government may have ruled out a bailout package for Kingfisher Airlines, but is likely to make sure that the cash-strapped carrier does not shut up shop.

Indications from the finance ministry and the prime minister's office suggest efforts would be made to stop the airline from shutting down operations.

A senior official said the government didn't want the firm to shut down when a turnaround in the economy was seen.

Growing concerns over the repercussions of it closing operations, especially when things have started looking up in the economy, appear to be helping the carrier remain afloat.

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Image: It does not want the airline to close operations when the economy is improving.
Photographs: Reuters

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Civil aviation minister Ajit Singh said on Thursday if banks found it a good business, they would loan money to the firm.

"The government is not going to ask banks to loan money to any private industry. It's for them to decide. They will have to decide on the basis of whether they will get it back or not," Singh said.

Asked whether any punitive action would be taken against the beleaguered carrier for flouting the 1937 Aircraft Rules, Singh said: "The Directorate General of Civil Aviation is considering all that. They have received some reports. Right now, our priority is to see how many flights it can operate and make sure these are perfectly safe."

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Image: The government is not going to ask banks to loan money to any private industry, says Ajit Singh.
Photographs: Reuters

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He said civil aviation was a vital sector for economic growth. "We are changing a lot of policies. The sector has to be encouraged, it has to grow," he said.

An income tax official said the department was considering the petition by Kingfisher and a final decision was likely to be taken on Friday.

"We are looking into its request. Some modifications will be made... (But) It will have to make part payment," said the official, adding the total outstanding dues were at about Rs 300 crore (Rs 3 billion).

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Image: Income Tax department will take decision on Kingfisher on Friday.
Photographs: Reuters

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On how the department would approach the case going forward, another senior official said whatever step needed to be taken next, it had to happen at the Central Board of Direct Taxes chairman level and subsequently, at the finance ministry level.

"Vijay Mallya (Kingfisher Airlines Chairman) may meet CBDT chairman and submit a road map for clearing the dues, after which CBDT has to get a nod from the ministry...Only then, the de-freezing of accounts is likely. As we see, with the road map and a payment of around Rs 50 crore (Rs 500 million), there is a possibility the freeze may be lifted," he said.

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Image: Vijay Mallya, Chairman, Kingfisher Airlines.
Photographs: Reuters

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The DGCA is examining the airline's fresh and curtailed schedule to operate 175 daily flights with 28 operational aircraft, the number of cockpit and cabin crew as also whether it was fulfilling the requirement that 10 per cent of its flights would have to be in the Northeast and other remote places.

Meanwhile, the Bharatiya Janata Party gunned for the government if it decided to go for a bailout package.

"Kingfisher and Air India are faulty models. The government is only using the civil aviation ministry to satisfy its alliance partners. Earlier, Air India was the only company that wanted bailout, but now, even Kingfisher desires for the same.

"How long can it continue like this? The civil aviation sector is in doldrums and there is a policy level defect," said Rajiv Pratap Rudy, former civil aviation minister.

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Image: The DGCA is examining the airline's fresh and curtailed schedule.
Photographs: Reuters

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