"Suspension of licence is very much on the cards," the source said, adding that it could be as early as October 21 or 22.
The action comes after debt-laden Kingfisher sought more time to respond to aviation regulator DGCA's show cause notice on why its licence should not be cancelled or suspended.
The airline last week said its planes would remain grounded until October 20, having stopped flying at the beginning of the month after an employee protest turned violent.
Kingfisher is yet to get approval from the regulator for its winter schedule which starts on November 6.
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