Mumbai: Adispute over ground handling charges between Cochin International Airport Ltd (Cial) and National Aviation Co. of India Ltd (Nacil), which runs Air India, could impact margins of the company that built the international airport at Kochi.
Cial says Nacil, the ground handling agency at the airport, owes it about Rs45 crore, calculated on the original deal that the national carrier would charge private airlines Rs60,000 per flight.
Trading charges: Vehicles line up in front of the Cochin International Airport at Nedumbassery in Kochi. Nacil won a 10-year contract from Cial in 1999 for ground handling facilities at the airport. Photo: Manoj Madhavan / Mint
Nacil says it is not bound to pay that amount because private airlines are paying it only Rs30,000-35,000 per flight. It adds that it has paid all dues till date based on the remittances received from carriers the company handled at the airport.
Cial may move court over the issue as it might wipe out the firm’s profits at the airport, said a person close to the development, who did not want to be identified.
Nacil won a 10-year contract from Cial in 1999 for ground-handling, which includes cleaning of cabins, check-in counter services and guiding aircraft on the ground.
If Cial fails to get its claims from Nacil, it will severely hurt profits. Its annual report for 2006-07 says, “Pending finalization of the same, the income for the year has been provisionally computed by the company at Rs17.25 crore and taken credit for in the accounts, which is subject to changes on final settlement with Air India. As on 31 March 2007, the company has to receive an aggregate amount of Rs28.40 crore from Air India on this account.”
Cial, promoted by the Kerala government, financial institutions, airport service providers, non-resident Keralites and a group of entrepreneurs, had posted a profit after tax of Rs37.50 crore for 2006-07, against Rs31.60 crore for the previous year, on a turnover of Rs112 crore.
“One can understand Nacil failing to get agreed amount from Jet Airways. There was an unresolved case in the court. But Nacil has even failed to charge the same from Indian Airlines, which is in the fold of Nacil. Because of this dues of about Rs45 crore, Cial is also bearing the interest cost since it had borrowed from financial institutions,” the person close to the development said.
A Nacil executive said on condition of anonymity that it has been billing the airlines at the stipulated rate of Rs60,000 for handling medium aircraft such as Boeing B737 or Airbus A320, but carriers such as Jet Airways have been paying it only Rs35,000.
“Cial’s claim as on 31 March 2007 from Nacil was Rs30 crore. However, Nacil has paid Cial all dues till date based on the gross turnover concept, that is based on remittances received from the carriers handled at the airport. We had informed about this to Cial,” the executive said.
“The remaining amount will be paid only as and when the carriers pay as per the billed amount,” he added.
A senior Jet Airways executive said he cannot comment as the issue regarding ground handling is sub judice.
Ground-handling fees at Kochi, even at Rs35,000 per flight, are significantly higher than Rs18,000 and Rs2,500 airports at Bangalore and Mumbai charge.
Recently, two so-called budget carriers—SpiceJet Ltd and Go Airlines (India) Pvt. Ltd—withdrew their Kochi flights citing high ground handling charges among other reasons.