IATA Clearing House reinstates Kingfisher Airlines

Amidst much turbulence, a relief for Kingfisher Airlines as IATA Clearing House (ICH) has reinstated Kingfisher Airlines. The debt-ridden airline was suspended from ICH earlier this month because of non-payment of dues.

ICH is the nodal agency that enables airlines from different countries to settle interline billings.

“Kingfisher Airlines is currently not in default of any payments and we confirm that our suspension from ICH has since been revoked,” Kingfisher Airline said.

A suspension by ICH makes it difficult for other airlines to accept tickets on connecting flights of the suspended airline. This is because, for passengers flying through connecting flights, airlines coordinate with the ICH for total payments.

Soon after ICH suspension, Oneworld alliance too announced that it had put the entry of Kingfisher Airlines into the alliance on hold. Then, Cathay Pacific sent out a circular to travel agents terminating its “Interline Traffic Agreement” with Kingfisher with effect from 10 Feb 2012.

The circular further requested travel agents to not issue any Cathay Pacific or Dragonair tickets with Kingfisher Airlines segments. This will impact daily flights of Kingfisher Airlines from India to destinations like Hong Kong and Singapore, which in turn have connecting flights with Cathay Pacific and Dragonair to China.

“We are in active discussions with both airlines to rapidly resolve this issue,” said a Kingfisher spokesperson on the termination of the interline traffic agreement by Cathay Pacific.

These events have impacted Kingfisher Airlines ambitious international plans. They were a key part of its turnaround plan as international flights have higher yields than domestic flights.

Gaurang Shah, Asst VP, Geojit BNP Paribas Financial Services pointed out that the airline company already has severe debt problems along with a large part of its fleet being grounded.

“Kingfisher has lost out on market share in the domestic market. This agreement with Cathay Pacific ending will also impact its topline and bottomline numbers negatively,” Shah said.

The whole turnaround expectation, hence, goes into a tailspin, he added.

Last month, aircraft manufacturer ATR had also cancelled Kingfisher Airlines's order for 38 ATR-72 turboprop planes because Kingfisher couldn’t make certain pre-delivery payments.