NEW DELHI: India's cash-strapped Kingfisher Airlines suffered a new blow Wednesday in its bid to keep flying as it was suspended from a global payments system by the International Air Transport Association (IATA).
The loss-making carrier, controlled by flamboyant liquor baron Vijay Mallya, owes suppliers, lenders and staff millions of dollars and has recently scrapped scores of scheduled flights.
"IATA has suspended Kingfisher Airlines' participation in the IATA Clearing House (ICH)... because the airline did not settle their ICH account," said Albert Tjoeng, spokesman for the industry body representing global airlines.
Airlines, travel agencies and other airline-associated companies join the IATA Clearing House to settle accounts for services provided by them to other airlines or companies.
The move by IATA, an international trade body made up of some 240 airlines, means Kingfisher will have to settle its bills with its travel partners directly rather than through the clearing house.
Kingfisher blamed its failure to pay dues to the clearing house on a decision by Indian income tax authorities to freeze its bank accounts last month over non-payment of taxes.
The carrier said in a statement the suspension by IATA, the second time the body has taken such action in a month, would not affect its flights and that it was in negotiations with tax officials to unfreeze its accounts.
"Our guests can continue to book with confidence either directly with Kingfisher Airlines or through their travel agents," the airline said.
Kingfisher, which expanded ambitiously to meet the travel needs of a growing middle class in the nation of 1.2 billion people, is the worst hit of India's six carriers by price wars, high fuel costs and an economic slowdown.
In another sign of the turbulence buffeting the airline sector, once vaunted as a symbol of the nation's economic vibrancy, a group of pilots from state-run Air India threatened to strike next month to press for back pay and allowances.
"Kingfisher's participation in the ICH will be reinstated after the airline fulfils the ICH requirements," IATA said. In February, IATA suspended the carrier for 10 days from the clearing house for not paying its dues.
Mallya, Kingfisher's chairman who also controls India's largest liquor company, has said he is seeking fresh capital to avert collapse of the carrier.
Analysts have mentioned IAG, parent company of British Airways, and Etihad Airways, flagship carrier of the United Arab Emirates, as firms that might be interested in taking a stake in Kingfisher.
Kingfisher, which is at least $1.3 billion in debt and has never made a profit since it first took flight in 2005, needs $400 million in immediate funds to stay in business, according to the Centre for Asia Pacific Aviation, a consultancy.
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