Ground handling costs for domestic operations of an airline, according to an estimate by the Centre for Asia Pacific Aviation (CAPA), account for 2.5 per cent of an airline’s operating costs. In the Indian context, where more than two-thirds of scheduled airline operations are in the low-cost segment and where operators would like to keep costs to the minimum so as to compete in a highly competitive market, any avoidable rise in this cost is cause for concern. Low-cost airlines have learnt, through own and others’ experiences that self-handling is cheaper, efficient and more reliable method of managing turn rounds. This factor is all the more important as the low-cost model relies on lower turn round timings and maximum utilisation of aircraft for revenue maximisation. Full-service carriers are also pursuing the rationale of keeping ground handling costs low as the demarcation line between full-service and lowcost airlines gets progressively blurred.

The government has announced 100 per cent foreign direct investment (FDI) in ground handling but its policies on restricting ground handlers have been the cause of persistent ill feeling amongst all airlines except Air India which is a huge beneficiary of the policies. Airlines have gone to court twice, the more recent case being that of Chandigarh International Airport where the Airports Authority of India (AAI) declared that only Air India Air Transport Services Ltd (AIATSL), an Air India subsidiary, would be allowed to carry out ground handling operations at Chandigarh and that ground handling staff on payrolls of airlines would be denied entry into the airport. The case is in court; but its prologue goes back to the beginning of what could be termed the second wave of liberalisation of Indian civil aviation — the advent of Air Deccan in 2003, followed by others trying to emulate the visibly successful model that Captain Gopinath had thrown up. A peep into the past will help understand the problem that has simmered for a dozen years now.

Background

Air Deccan commenced operations in August 2003; but even before that, in May that year, the Home Ministry had, in a bid to tighten up airport security, ordained that all ground handling at airports be carried out by government firms floated by Indian Airlines, Air India and AAI. It turned down a proposal by the Ministry of Civil Aviation (MoCA) which permitted domestic airlines to continue doing self ground handling at airports while denying foreign carriers that option. At that time, there were about 20,000 personnel working for more than 40 ground handling agencies across the country. Jet Air had about 4,000 employees for ground handling tasks. The government’s counter to the fears of these personnel was that it would work out a formula wherein trained staff would be inducted into the new ventures being floated by the government firms. However, therein lay a fallacy that airlines hastened to point out. If the personnel that were going to work for the government firms were largely the same as were working for private ones, how were enhanced security levels being achieved by the change? Another question raised by airlines was about the security implications of joint ventures which both Indian Airlines and Air India were contemplating with Singapore Airlines (SIA) and Singapore Airport Terminal Services (SATS), an SIA subsidiary, for the ground handling services. Finally, the Home Ministry permitted private domestic airlines to carry out self ground handling in June 2003.

In 2007, a new policy was introduced on ground handling operations which did not allow self-handling by domestic carriers at the private airports at Delhi, Mumbai, Bengaluru and Hyderabad, along with the AAI-run airports at Chennai and Kolkata. The alternatives this time were three entities — the airport operator or its subsidiary, a subsidiary of Air India and Indian and a ground handler selected through a competitive bidding process. Airlines which had been doing ground handling at these airports were barred from self-handling. Understandably, the private airlines had moved the Supreme Court in 2011. Their main concerns were lower efficiency of turn rounds, reduction in quality of service from those airline offerred themselves and huge losses on account of the investments made by them in ground equipment and training of personnel. Though the apex court has not yet pronounced a judgement on this yet, it has directed that an interim order in this regard be followed, allowing airlines to self-handle their aircraft even at metro airports.

In September 2015, private airlines operating at Chandigarh airport were denied ground handling services and five private airlines filed a petition against the contract awarded by AAI to AIATSL to handle ground operations. Punjab and Haryana High Court allowed private airlines to manage ground handling services against the decision of AAI.

New Civil Aviation Policy

The draft National Civil Aviation Policy, now in its final lap before promulgation, devotes one section to ground handling and envisages that a new framework would replace the Ground Handling Policy of 2010 which has never really found acceptability amongst aircraft operators. The draft directs airports to ensure that there are at least three Ground Handling Agencies (GHA) including Air India’s subsidiary/JV at an airport to ensure fair competition. No upper limit on the number of GHAs at an airport is envisaged. Significantly, and as a very welcome step for domestic airlines and charter operators, they will be free to carry out self-handling or through their own subsidiaries or to outsource to other airlines or to a GHA. If the final policy embodies this stipulation, one longstanding gripe from aircraft operators should disappear completely. Of course there are some conditions. The ground handling staff would have to be on the rolls of the airlines or their subsidiaries or the GHA and not of a manpower supplier; domestic airlines including their subsidiaries and GHAs would be permitted to take contract employees on their rolls but for a period of at least one year. The policy also speaks of encouraging rationalisation of airport royalties and other additional charges levied on GHAs. The airport royalties have been a burden that has indirectly been passed on to the passenger and any alleviation of this load will bring cheer to airlines and passengers! There is also a mention in the draft of MoCA’s intent to encourage “consolidation in ground handling through stakeholder consultations, with the objective of bringing in economy of scale and higher efficiency, without compromising service quality, safety, security and cost to passengers”. However, the mechanics behind this laudable intent is not implicit in the draft; nor is it easy to imagine such an ideal state being brought about, given the diverse interests of the airlines.

General Aviation

Even as the new policy is being finalised, in a move that has ominous portents for ground handling, Delhi International Airport Limited (DIAL) issued eviction notices to all the general aviation aircraft operators some of whom are carrying out their maintenance activities under existing agreements and within the ambit of existing rules and regulations, ordering them to vacate the hangar spaces so far leased to them on the airside in Delhi airport. The reason is that two fixed base operators (FBOs)/maintenance, repair and overhaul (MROs) (Bird Worldwide Flight Services-ExecuJet and Indamer-Mjets) which have entered into agreements with DIAL are to be now the FBO/MRO for the airport. That is to say that these entities would be the only ones allowed to handle flights for general aviation in Delhi. Understandably, Business Aircraft Operators’ Association (BAOA) is filing a writ petition and is determined to fight it out legally to redress the grievance felt by the general aviation operators using Delhi airport.

Conclusion

According to a CAPA report, if ground handling was to be restricted to a handful of agencies as envisaged in the Ground Handling Policy 2010, the total extent of ground handling business would increase at a rate such that India “could become a $1-billion ground-handling market by financial year 2023”. While that may be an impressive statistic, it is certainly not in the interest of airlines and other aircraft operators to be forced to surrender their privilege of carrying out self ground handling if they have the wherewithal to do it. The whole airline industry awaits the final policy to see if it contains the self-handling provision and then to see how it translates on the ground. However, bureaucratic interpretations could still play spoilsport.