India's Kingfisher airline fights for survival

India's Kingfisher Airlines was struggling to avoid closure on Tuesday as regulators ordered it to prove its operational viability after mass cancellations of flights. Scores of national and international flights have been scrapped over the past three days, leaving passengers stranded at airports and airline bosses fighting to save the debt-laden company. Kingfisher executives were summoned before the Directorate General of Civil Aviation (DGCA) over the cancellations, which the firm blamed on tax officials suddenly freezing its bank accounts. Bharat Bhushan, head of the DGCA, told reporters after the meeting in New Delhi that only 28 of Kingfisher's fleet of 64 registered aircraft were in operation. "We have directed Kingfisher to come up with a revised schedule with these aircraft, we have given them until tomorrow," he said. "To ground an airline of Kingfisher's size... would cost more difficulties to the passengers so we have to take a balanced approach," he added. Shares in the Bangalore-based airline fell nearly 20 percent in the morning before climbing back to a seven-percent drop at lunchtime as investors exited. Bhushan said Kingfisher had been ordered to provide better information to passengers over the cancellations after complaints from travellers across India, and added that the airline's safety standards would be scrutinised. "We have ordered special safety surveillance on the aircraft," he said. "I don't want to give the impression that these aircraft are unsafe in any way but it is better to be cautious." Emerging from the regulators' headquarters, Kingfisher chief executive Sanjay Agarwal said: "We have had a good meeting. Some more information has been sought by DGCA which will be provided in the next 24 hours." The loss-making carrier -- which is battling to pay creditors and staff -- is beset by soaring fuel costs and high local sales taxes, as well as an intense domestic price war and poor airport infrastructure. Kingfisher, owned by brewing magnate Vijay Mallya, has never posted a net profit since it started operating in 2005. The airline's future appears increasingly uncertain with media reports that 50 pilots had resigned in one week -- many of them leaving to join rival carriers. Mallya told the Times Now television channel late on Monday that he was determined his airline would survive. "Closing down is not an option. It will not happen. Government does not want it to happen. It is not in national interest," Mallya said. "We have asked banks to consider our proposal to provide more working capital." International flights to Bangkok, Singapore, Kathmandu and Dhaka have been among those affected, and scores more flights were again cancelled on Tuesday. "I don't deny we have taxes due... The bottom line is we requested for time to pay these dues," Mallya said. Bhushan said that Kingfisher had "a major problem regarding payment of salaries" that had to be tackled immediately after previous guarantees to the DGCA were breached. "They assured that wages would be paid but this has not happened, which I deeply regret," Bhushan said. Kingfisher has said it is re-booking passengers on competing airlines, finding other Kingfisher flights and offering full refunds to stranded travellers. The government has ruled out any bailout package for the airline. Kingfisher posted a net loss of 4.44 billion rupees ($88 million) in the three months to December, compared with 2.54 billion rupees a year earlier. In September, it axed the low-cost Kingfisher Red service to concentrate on its full-fare business.