IATA Suspends Kingfisher From Inter-Airline Transaction System

New Delhi: In yet another big blow to Kingfisher Airlines, a leading international association suspended the carrier from its inter-airline transaction body for failure in settling dues since February.

The move -- which is akin to the Reserve Bank of India (RBI) removing a commercial bank from its currency clearing system -- came barely hours after the Income Tax Department froze more bank accounts of the Vijay Mallya-led carrier for non-payment of dues.

According to industry experts, the move to suspend Kingfisher from the clearance system on account of non-payment of dues to the International Air Transport Association (IATA) is expected to affect nearly 30-35 percent of its business.

This puts a question mark over whether tickets for the carrier can now be booked using globally interconnected systems like Galileo, Sabre and Amadeus.

The airline in response said it was unable to pay its dues because its bank accounts were seized by the Income Tax Department with whom the passenger carrier is negotiating.

"Due to the accounts getting attached by the tax authorities, we were not able to make a payment to (IATA) which resulted in a temporary suspension," an airline official said.

"We are working with the tax authorities and expect the accounts to be un-attached shortly. As soon as this is done, we will pay our dues to IATA and get reinstated."

The airline has also reassured its passengers that suspension will not impact them and that they can book their tickets directly with the carrier.

The IATA had previously barred Kingfisher from its international ticket clearing house (ICH) system on Feb 2, but reinstated it eight days later after some payments were made.

"IATA has suspended Kingfisher Airlines' participation in the ICH. This is because the airline did not settle their ICH account within the stipulated deadline," a statement issued by IATA from Geneva said.

"Kingfisher's participation in the ICH will be reinstated after the airline fulfils the ICH requirements," said the association that has all passenger and cargo carriers as its primary members.

IATA further said that the passenger carrier will not be able to settle its transactions from other ICH member airlines.

"Suspension from the ICH means that airline will not be able to settle their transactions with other ICH members via the clearing house."

However, despite the suspension, airlines can continue to function by settling bilaterally with other airlines.

Kingfisher's woes were exacerbated Feb 18 when its employees in Kolkata went on a flash strike as they had not received their salaries for several months.

The airline, which later on curtailed its flight plans, blamed the seizure of its bank accounts in February by the Income Tax Department as the main hurdles in clearing of dues.

Kingfisher has a debt of 7,057.08 crore. Its net loss widened to 444.27 crore for the quarter ended Dec 31, 2011, from 253.69 crore in the October-December quarter in the last fiscal.

The airline's share, which was ruling at 49.25 about a year ago, closed Wednesday at 21, with a loss of 6.25 percent over the previous close.