The International Air Transport Association has asked Kingfisher Airlines to make a cash deposit of over Rs 50 crore to get its suspension from the billing settlement plan revoked.
IATA's BSP is a payment gateway for travel agents. Remittances to airlines are also made through the system. IATA has asked Kingfisher Airlines to make the deposit fearing that the airline may not be able to honour ticket refunds because of insufficient revenue or shutdown.
IATA spokesperson confirmed the development but refused to disclose deposit amount stating that this was commercially sensitive information. The Kingfisher spokesperson did not respond to an SMS seeking comment.
Interacting with mediapersons at Hyderabad on Thursday as part of India Aviation Show the IATA director general Tony Tyler said, "We had to suspend Kingfisher from the billing settlement plan and the international clearing house. It was necessary to protect the whole system. We are discussing with Kingfisher the terms for their reinstatement." Tyler is expected to meet Kingfisher's top management in Delhi on Friday.
"We wish them (Kingfisher) well. We hope they overcome their difficulties and hope to reinstate them," Tyler said.
Tyler said the proposed hike in tariffs at Delhi airport will hit the airlines. Delhi airport had proposed over 700% hike in tariffs and Airports Economic Regulatory Authority of India (AERA), a tariff regulator, has proposed over 300% hike.
Tyler said that even the the reduced tariff proposed by AERA was unacceptable.
"There will be a ripple effect on economy. Airlines will have to review viability of their operations," he said.
He welcomed the government decision to allow foreign airlines to invest in Indian carriers but said FDI was not a panacea.
"Without addressing the other three pillars - costs, taxes and infrastructure - it may only be a theoretical exercise because under current conditions the odds are stacked against any investor making a positive return on investment in Indian aviation sector and no one is likely to come forward unless they see themselves making a profit," Tyler said.
He said IATA was opposed to the European Union's decision to impose a carbon tax but said the airline body was against a trade war on issue.
"We don't want a trade war. We want measures to be put in place without risking a trade war because airlines will get penalised for no fault of theirs," he said.
