Kingfisher Default Said to Raise Airline Costs: Corporate India

Payment defaults by grounded Indian carrier Kingfisher (KAIR) Airlines Ltd. are prompting aircraft lessors to demand a premium to cover risks in the South Asian country.
Companies leasing out planes are insisting on a one-year security deposit instead of the usual three-month cover in addition to a commitment to hire the aircraft for as long as nine years, said two officials of Air India Ltd. The state-owned firm is negotiating to lease 19 Airbus SAS A320s for six years, they said, asking not to be identified because the talks are private.
Higher costs may weigh on local carriers that are already struggling with a combined debt of $13.6 billion, the region’s most expensive fuel tariffs and a falling rupee, said Mark D. Martin, chief executive officer of Dubai-based Martin Consulting LLC. Lessors including a unit of American International Group Inc. are wary after the government failed to release some aircraft grounded by Kingfisher, leading to messy litigation.
Read News In Full 20/09/13 Karthikeyan Sundaram/Bloomberg.com