The International Air Transport Association (IATA) has suspended Kingfisher from its clearing house due to non-payment of dues, a spokesman for the industry body of global airlines said.
“Kingfisher's participation in the IATA Clearing House (ICH) will be reinstated after the airline fulfills the ICH requirements," a statement said.
An international airline like Kingfisher everyday uses different service providers who help with catering, passenger handling and cargo clearance. Airlines would have to pay multiple vendors in different currencies.
IATA's clearing house becomes the middleman providing what it describes on its website as “on-time settling of interline accounts between the world's airlines, airline-associated companies and Travel Partners.”
Without that assistance, Kingfisher will have to settle its bills directly with vendors –a logistical nightmare for the carrier, and an unappealing prospect for vendors, given the airline's current financial crisis.
Kingfisher will also have to coordinate directly with partner airlines. So if Kingfisher is flying a passenger to one stop, and using a partner for another leg of the journey, it will have to pay the airline directly, rather than being able to use IATA to handle that.
Kingfisher's mounting debt has turned into an international headline.
Kingfisher, which suffered a loss of Rs. 1,027 crore in 2010-11 and has a debt of Rs. 7,057 crore, posted a Rs 444 crore loss in the third quarter of this fiscal.
The government has said repeatedly that it will not bail out Kingfisher Airlines. However, Civil Aviation Minister Ajit Singh has also said that the airline should not be allowed to collapse
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