The Kingfisher Scam

It’s not unsurprising that the Kingfisher story is more-or-less over. To say, History repeats itself is amiss in this case. Because. the happenings were too familiar. It’s like Deja-vu.

Following the Kingfisher Airline (KFA) Story is like watching the ECG machine. It’s hope, fear and frustration all intermixed. After a while one feels intent to pull out the plug and end the story.

I am amazed with the way our aviation industry has behaved after the Open-Sky Policy of 1991. Please Read This.

The period had a high point in 1993 to a low by 1997. I started my career during this period and I don’t believe any bullshit reasons put forward as a cause for those failures.

The reality is in the intention. There are Private Airlines who survived through thick and thin. And they will go on. But there will be businesses who will enter this game and pull a fast one.

This time the Government was also the party.

Let’s take a scenario.
If you own a business and it runs at a loss. What stops you from shutting shop? It’s your enterprise and you are free to ease out. OK. you are a public limited company. So what? You either sell or wrap up.

What would make you hold on?
Why would you incur daily losses of crores and still carry on?
Why would the Govt. step in and help restructure your loses?

Let’s go further.

When flying from A to B, you don’t travel and then pay. Most travellers pay months in advance. For all those revenue inflows, what are the outflows?

KFA runs at a loss of 8 Crores per day. It has an accumulated loss of 7000 Crores since 2005.

That means, KFA has not paid Rs. 7000 Crores worth of bills till date. Simple.

Now, whose bills are not paid?

The Oil Companies charges, Airport Authorities of India Charges, Income Tax, State bank of India, Aircraft leasing charges.
Except the Aircraft Lessors, all of them are Government “Influenced” agencies.

That is why, the Aircraft lessors have sued KFA and one of them retrieved their planes.

Now here is the Scam.

The Government wanted this Airline to run.

And KFA was running FREE of COST. Yes. Free.

Out of all the revenue collected from the passengers, how much percentage is paid back as charges. Miniscule.
Where does the rest of it go?

What will happen next?

The Government will make its agencies bear those 7000 or whatever crores and convert it into bad-debt. It will be written off inevitably against a budget.

Do you know there is something called as Revenue Forgone in our Union Budget?

So, what does the govt. get when it allows an Airline to Fly Free of Cost for 4 to 5 years? Definitely, a cut from the revenue.

Compared to scams like 2G – 1.76 Lakhs crores, Coal – 1.86 laks Crores, this scam of 7000 Crores looks peanuts. Still, the Govt. and its cronies sure know how to swap India for personal benefits.

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