Locked in miles, nowhere to fly

The ‘King of Good Times’ is giving its partner banks a hard time. Banks that have partnered Kingfisher Airlines to offer air miles as rewards to credit card customers are stuck with the inventory purchased from the private carrier, as it has reduced its flight services and suspended operations on some routes. Click here for Cloud Computing Also Read Related Stories News Now - Tax authorities claim to recover Rs 60 cr from accounts - Pilots' no-show grounds more Kingfisher flights - Today`s picks - Sensex up 84 points on IIP data, rate cut - Kingfisher Airlines opts out of India Aviation 2012 - SBI to consider fund raising through FPO, QIP next fiscal Typically, banks buy air miles three-six months in advance from airline companies at a discount to the market price. The lenders offer these miles as rewards to their clients for credit card spends. These contracts do not have a buy-back clause that would allow banks to return the miles and recover money from the airline. Several banks, including State Bank of India, ICICI Bank, HDFC Bank and Axis Bank, have partnered Kingfisher Airlines for their credit card reward programmes. “We are not buying fresh miles from Kingfisher, since we already have that in our inventory and there are no takers. We may have to incur a loss as there is no buy-back clause but it will have no significant impact on our overall operations,” said a senior official of a large private sector bank. The official said the bank was willing to offer alternative rewards to its clients, who have received Kingfisher miles but not used them yet. Besides partnering for air miles, a few lenders like American Express and ICICI Bank also have co-branded credit cards with Kingfisher Airlines. Bankers said they were no longer marketing these cards on their own. “If a customer wants a Kingfisher card, only then are we offering the card,” said a banker familiar with the developments. The cash-strapped Kingfisher Airlines, which reported a loss of Rs 1,027 crore in 2010-11 and Rs 1,175 crore in the first nine months of this financial year, is believed to have accumulated losses of around Rs 6,000 crore. The airline has opted to restructure its debts for the second time and is finding it difficult to pay staff salaries on time.