India said it would give away Kingfisher Airlines' slots and foreign flying rights to other operators in the latest blow to the grounded carrier.
Kingfisher, controlled by drinks baron Vijay Mallya, has been halted due to a cash shortage, and lenders are trying to recover USD$1.4 billion of loans in default.
Kingfisher, which saw its flying license expire at the end of last year, has two years from then to apply for a renewal. But with lenders, airports, and banks looking to recover their dues, and with its slots going to rivals, a comeback could prove extremely difficult for the airline, once India's number two carrier.
India's civil aviation ministry said in a statement it would make the slots and flying permits available to other airlines.
Kingfisher, whose planes have been idle since October, flew to Hong Kong, Singapore, Thailand, United Kingdom, and UAE among eight others.
Indian carriers will now have an additional 25,000 seats available each week to fly to these countries, the statement said.
Kingfisher posted a INR7.55-billion rupee (USD$140 million) loss in the three months to December 31 as its planes sat idle, and regulators rebuffed its revival plans.