Govt allows Indian air carriers their own groundhandling

In a policy reversal, the government today allowed Indian carriers to carry out ground-handling of their own flights at all the airports.

The proposal was made at a meeting Civil Aviation Minister Ajit Singh had with representatives of airlines here, which came ahead of a hearing of the matter in the Supreme Court soon.

Under the 2007 policy, the main airports were supposed to have only three ground handling companies -- the Air India- Singapore Airport Terminal Services (SATS), the local airport operator in alliance with a ground handling partner and one to be chosen through competitive bidding. The six airports are at Delhi, Mumbai, Bangalore, Hyderabad, Kolkata and Chennai.

The airlines complained against the policy saying it would lead to largescale retrenchment and that there would be no alternative use of assets already in place.

"After taking into consideration views of all stake holders, a Cabinet Committee on Security note was submitted and it was approved that all private airlines, including foreign airlines, may undertake self handling in respect of 'passenger and baggage handling activities at the airport terminals' and 'traffic service including the passenger check-in', which require passenger interface, at all airports," a statment from the Ministry said.

Also, all cargo airlines, which have their own cargo aircraft, would be allowed to undertake self handling in their hub airports. But foreign airlines and private independent ground-handling service providers would not be permitted self ground-handling at joint user Defence airfields, it said.

The Ministry had also extended the time limit for exit of non-entitled companies beyond 31-12-2009 up to 31-12-2010. While the Ministry was taking steps to implement the policy, the domestic airline operators had filed a petition in the High Court of Delhi in November 2010 challenging the new regulations.

The court dismissed the writ petition in March 2011. Thereafter, an SLP was filed in the Supreme Court challenging the order of Delhi High Court. The ground handling business is estimated to be worth Rs 2,000 crore a year. It involves services like check-in, baggage handling, cargo handling, aircraft cleaning, loading and unloading of food on aircraft, besides ferrying passengers to and from planes.

Under the existing policy which is now being changed, the state-run Airports Authority of India (AAI) had estimated it would be able to earn additional revenue of at least Rs 350 crore per annum.

While AAI operates most of the country's airports including those at Kolkata and Chennai, GMR and GVK-led consortia operate Delhi, Mumbai, Hyderabad and Bangalore airports.

Private airlines, which have their own ground handling staff at these and many of the other airports, had in their petitions before the courts as well as the government, opposed this policy on the ground that they would lose their competitive edge by assigning their ground handling job to either to Air India, one of their competitors, or to airport operators.

Allaying the fears of the airlines regarding monopoly of a few ground handlers, Singh said there could be as many ground handlers as can fulfill the conditions stipulated in this regard except airlines themselves.

The Minister said even airlines could create their subsidiaries for the purpose of ground-handling and they can participate in the process to become designated ground handler.

However, the Minster said outsourcing of employees was not permitted due to security reasons. He also asked the airlines to motivate low-cost ground-handlers from across the world to come to India to bring competitiveness and cost effectiveness.

Jet Airways, IndiGo and SpiceJet are among the airlines which had opposed the policy, saying giving away ground- handling job to others would make operations more expensive.

The new draft policy would be presented before the apex court and enable the airlines to withdraw their cases in the matter and arrive at an out-of-court settlement as desired by the court.