Policy on ground handling being deferred again

Policy on ground handling being deferred again

Mumbai: The civil aviation ministry is set to defer the implementation of a new ground handling policy for the third time in a row. The policy, which has been opposed by domestic private airlines, was to come into force from 1 January.

Approved by Parliament on 1 February 2007, the policy seeks to bar private carriers such as Jet Airways (India) Ltd and Kingfisher Airlines Ltd from ground handling at the six metro airports.

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It envisages ground handling only by subsidiaries of Air India, airport operators and service providers, selected through competitive bidding at the airports of Mumbai, Delhi, Chennai, Bangalore, Hyderabad and Kolkata.

“The implementation of the new ground-handling policy would be deferred for now. We will review the policy after inter-ministerial consultations shortly," civil aviation minister Praful Patel told Mint on Monday. “Private airlines will continue to do self-handling at metro airports."

Loss-making Indian private airlines have been lobbying hard against the policy out of concern that at least 10,000 employees will become jobless and retrenching them would not be an easy option. They would also need to spend three times more if the government implements the policy.

Dedicated ground-handling companies have been keenly waiting for the change in policy to grab the business, worth an annual Rs2,000 crore.

Air India, one of the leading ground-handling companies in the country, is carrying out its ground operations through a subsidiary, Air Transport Services Ltd, and earns around Rs1,000 crore a year.

Ground handling includes general administration, baggage, freight and mail handling, loading and unloading of aircraft and transport of crew, passengers and baggage, fuel and oil handling and catering services.

The Federation of Indian Airlines, or FIA, has been fighting against the proposed new policy on behalf of Jet Airways, Kingfisher Airlines, SpiceJet Ltd, Go Airlines (India) Pvt. Ltd (GoAir), Paramount Airways Ltd and InterGlobe Aviation Ltd (IndiGo).

“There is no change in our stance," Jet Airways executive director Saroj K. Datta said.

Samyukth Sridharan, chief commercial officer of SpiceJet, said: “Going by the indicative cost given by the ground handlers at metro airports, the cost for private airlines will be at least two to three times more."

“At international airports, the airlines are given the option to either self-handle or to outsource. This leads to competition and brings down the cost. Moreover, why this double standard by allowing only Air India to undertake ground handling?" Sridharan asked.

According to a July 2009 report by consulting firm Centre for Asia Pacific Aviation, or Capa, many carriers have raised objections to the policy on grounds that they will lose control over service quality and cannot maintain on-time performance.

FIA argued that the airlines should be given the option to carry out the operations themselves or outsource to a dedicated service provider.

“If it’s commercially viable, an airline will opt for third party. Or it will handle on its own," Sridharan said.

A senior executive at a low-fare carrier, who did not want to be named, said that a third party was charging Rs3,500 for ground-handling services for landing of a 180-seat plane while self-handling costs Rs1,100. The services offered include ramp management and freight handling. “Whatever one is charging, it should reflect the real cost. We should not be taken for a ride," the executive added.

Not too many of the ground handlers were willing to comment on the policy.

“We are here not to compete with airlines, but to cooperate with them. We get work through tenders floated by private and public airports. We can offer cost advantage and quality services with the same staff (as) deployed by the airlines at airports," said a senior executive at Celebi Ground Handling Inc. of Turkey, which has a presence at the Delhi and Mumbai airports.

The executive, who did not want to be identified as he is not authorized to speak to the media, said specialized ground-handling firms can offer better services because they have more advanced equipment and a trained workforce. “We are not averse to competition from airlines. If you look at the prices offered by us at Delhi and Mumbai airports, we are offering lower prices," he added.

According to the Capa report, the US does not have a separate ground-handling industry as airlines themselves take care of these services.

In Europe, a European Commission directive says at least two airlines should be allowed to do self-handling at one airport. But there are many ground-handling operators and this competition brought charges down. “The number of (ground-handling) suppliers has increased along with the growth in air transport in general; the prices for ground-handling services have decreased and the quality of services has generally improved," the report said.

At Singapore’s Changi Airport, ground handlers were permitted to commence operations in March 2005, the report noted.

Those eyeing the ground-handling business in India include Singapore Airport Terminal Services Ltd, Germany’s GlobeGround Deutschland GmbH, Services Portuguese de Handling, SA, Cambata Aviation Pvt. Ltd, Dubai’s Dnata Group, Menzies Aviation Plc, Jet Air Pvt. Ltd, Jeena and Co. Pvt. Ltd, Taneja Aerospace and Aviation Ltd and the Bird Group of Delhi.