Kingfisher Airlines facing losses

Hit by high fuel costs and low air fares, Vijay Mallya-owned Kingfisher Airlines has suffered a net loss of Rs 240 crore in 2005-06. It has continued to be in the red in the first six months of the current financial year also, with the total loss mounting by Rs 107 crore, according to figures the airline furnished to the government. The losses the airline has suffered were primarily due to the pricing of tickets well below the direct operating cost, high price of aviation turbine fuel and heavy sales taxes on it, besides the loss of fuel due to heavy traffic congestion over major airports. In a bid to offset losses, major airlines have from today effected a hike in their tickets per coupon by imposing a traffic congestion surcharge of Rs 150.

The levy is to offset the cost of fuel burn due to aircraft hovering over major airports for periods ranging from 30-45 minutes. The carriers, under the banner of the federation of Indian Airlines, had last month increased their lowest level fares. Kingfisher, in its communication to the government, pointed out that while competition was a well acknowledged business practice, it was unprecedented that tickets were being priced well below cost to attract traffic. Mallya has also been campaigning for freedom to allow domestic carriers to fly abroad, especially to neighbouring countries. He has been seeking changes in the policy which makes it mandatory for carriers to complete five years of domestic operations and possess a 20-aircraft fleet to enable them operate to foreign destinations.

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