Kingfisher Airlines' licence to operate was suspended on Saturday after the debt-laden Indian carrier failed to address the regulator's concerns about its operations.

Controlled by Vijay Mallya - the self-styled "King of Good Times" - and seven months behind on salary payments among other missed bills, Kingfisher's fleet has been grounded since the start of the month when a staff protest turned violent.

The airline, which has never made a profit since being founded in 2004 and reeling under $1.4 billion of debt, will have its licence reinstated if it provides a plan that satisfies the aviation regulator, a government source told Reuters.

A complete cancellation of the licence was unlikely, said the source, who declined to be named as he is not permitted to speak to the media. A Kingfisher spokesman would not comment.

The company's steep decline underlined the problems of operating in India's airline sector, where players grappling with rising fuel costs face aggressive pricing caused by overcapacity.

Mallya, a liquor baron who owns a Formula 1 motor-racing team, is famous for lavish parties at his $16 million beachside villa in Goa and also his company's annual swimsuit calendar.

The licence suspension, until further notice, was announced by Arun Mishra, director general of Civil Aviation.

The move had been widely expected after Kingfisher failed to respond properly to queries from the regulator regarding its ability to provide a "safe, efficient and reliable service".

"The writing is on the wall," Amber Dubey, director, aerospace and defence at KPMG India, told the ET Now television channel. "It was a matter of when ... the moment is now."

The airline had said on Friday it expected to begin flying again on November 6 if the government approved its plan to resume operations.

The Centre for Asia Pacific Aviation has said a fully funded turnaround for Kingfisher would cost at least $1 billion.-Reuters