Pvt carriers up in arms over ground handling

Private carriers are up in arms against the government's decision not to allow them to undertake their own ground handling under a new policy that is awaiting Cabinet approval.

They say this would increase the cost of ground handling four to seven times, depending on the airport, and that this additional cost will have to be passed on to customers.

Under the proposed new policy, only the national carrier, ground handling companies and airport operators can offer these services. Currently, Jet Airways, SpiceJet and GoAir are among the major airlines that look after their ground-handling at many airports.

The new policy, once approved, will be applicable immediately at new airports like Hyderabad and Bangalore which will be operational next year. In other cities, the policy will be implemented after January 1, 2009.

GMR Hyderabad International Airport Limited (GHIAL), which is developing the Rajiv Gandhi International Airport in Shamshabad, has awarded seven-year ground-handling contracts for third-party airlines to two consortia: Menzies and Bobba and the combine of Singapore Air Terminal Services (SATS), Indian Airlines and Air India.

Bangalore airport has given its ground-handling contract to two consortia "" Air India and SATS and GlobeGround India.

Carriers say the government, in its attempt to ensure that airports make money, are forcing them to outsource ground-handling services, which account for 3-4 per cent of costs. "We will take up the issue with the ministry soon," said a SpiceJet source.

Jeh Wadia, managing director, GoAir, said, "We have already made representations to the ministry and hope it will look into them."

The apprehension among airlines stems from the long-standing problem at Kochi airport where ground handling is done exclusively by Air India.

"Our ground-handling charges per flight are close to Rs 35,000, whereas they would come to around Rs 6,000 if we did the work ourselves. They were charging Rs 70,000 earlier; the current rate has been agreed on after much negotiation," said an executive of a leading carrier.

Though neither Hyderabad nor Bangalore have come out with their ground handling plans or charges yet, their space rental charges are indicative of what is to come.

"Charges for space rental including back-up and ticketing office comes to more than Rs 4,000, more than double what we used to pay Airports Authority of India at the earlier airport. Ground-handling charges will be on the same lines," said a SpiceJet official.

The industry expects Hyderabad to charge Rs 18,000-20,000 per flight.

Ministry officials said these problems were being looked into and would be resolved once the Airport Economic Regulatory Authority, which will approve tariff structures (airport charges including air navigation charges) and monitor airport standards, is set up. The bill for setting up the regulatory body was approved in May.