Domestic carriers can establish their own ground-handling units at India’s six metro airports, aviation minister Ajit Singh told airline chiefs on Thursday, reversing an earlier decision and ending a long-running dispute between the government and local airlines.
“Airlines can create their subsidiaries for the purpose of ground handling and these subsidiaries can participate in the process to become the designated ground handler,” the aviation ministry said in a statement, citing Singh.
According to the ministry’s proposed 2007 ground-handling policy, only three external ground handlers were allowed to handle domestic flights at metro airports, a business estimated to be worth Rs.2,000 crore a year. Currently, airlines handle flights on their own.
Jet Airways (India) Ltd, IndiGo, Kingfisher Airlines Ltd, GoAir and SpiceJet were among those that had opposed the policy, saying it would make operations more expensive and approached the Supreme Court against the proposed policy.
The court will hear the matter on 6 November.
A new ground-handling policy will be drafted, which may prompt the airlines to withdraw their case against the government. At the last hearing, the court had asked the two sides to resolve the issue amicably.
Singh said outsourcing of work will not be permitted because of security reasons and asked airlines to motivate low-cost ground handlers to come to India to promote competitiveness and cost effectiveness.
The issue was discussed at a meeting that also included aviation secretary K.N. Srivastava, joint secretary Prabhat Kumar, Air India chairman Rohit Nandan, IndiGo promoter Rahul Bhatia, SpiceJet chief executive Neil Mills, Jet Airways chief commercial officer Sudheer Raghavan and airport representatives.
“This is the first time I have seen a minister holding a meeting and a decision was taken there and then. The only people who will be unhappy will be the airport operators,” said an airline official, who was present at the meeting. He did not want to be named.
GMR Infrastructure Ltd operates Delhi and Hyderabad airports. GVK Power and Infrastructure Ltd runs Mumbai and Bangalore, while state-run Airports Authority of India operates most of the country’s other civilian airports.
GMR and GVK did not reply to an email seeking comment.
The spokesman for Airports Authority of India could not be reached for comment.
Ground-handling services include check-in, baggage handling, cargo handling, aircraft cleaning, loading and unloading of food and beverages on the aircraft, providing electricity back-up to planes at airports, supplying water to the carrier, ferrying passengers to and from planes and maintaining on-board toilets.
The ministry’s earlier policy had stated that the respective airport operator, a subsidiary of Air India and one other company selected by the operator will be allowed to handle flights.
“Third-party handling will also be permitted to these subsidiaries or their JVs (joint ventures) on the basis of revenue sharing with airport operator,” the minsitry had said in February 2007, adding “airlines or entities presently involved in ground handling which are not covered under the policy given above will not be permitted to undertake self handling or third-party handling with effect from 1 January, 2009.”