Airports, govt working on groundhandling formula

Mumbai: Private airport operators, along with the government, are working on an offer which they hope will end the opposition of airlines to outsourcing their groundhandling operations, as mandated by a new policy effective from January 1, 2009.
Currently, airlines, including Jet Airways and Kingfisher Airlines, undertake their own groundhandling. But under the new policy, they will not be permitted to do so.
Carriers have said that at least 8,000 employees working in these companies will need to be given the pink slip if the new policy is implemented. They have also argued that outsourcing will dramatically increase their overall costs, especially at a time when airlines are reeling under losses.
To get out of the impasse, airport operators of two of the biggest airports in the country — Mumbai International Airport Ltd (MIAL) and Delhi International Airport Ltd (DIAL) — have awarded groundhandling contracts to specialised groundhandling agencies, but have decided not to take any revenue share from them on domestic flights. In normal circumstances, they were looking at taking at least two-thirds of the revenue earned from carriers as their share.
Both the airports will have a revenue share in the earnings from international flight operations — 13 per cent for DIAL and 15 per cent for MIAL. The move, they hope, will help the groundhandling companies to pass on the benefit to domestic airlines in terms of cheaper groundhandling rates in the domestic skies — one of their main grouses.
This move is likely to be followed by the intervention of the civil aviation ministry, which is likely to direct the mandated groundhandling agencies to absorb a large part of the current groundhandling staff employed with private carriers into their fold, ministry sources said.

he new groundhandling policy mandates that groundhandling be serviced only by three agencies — National Aviation Company Ltd or its subsidiary company in a joint venture partnership, the airport operator (like GVK and GMR) and a third party that will be allowed to provide ramp as well as the passenger-handling services at the airports.
The airlines have reportedly been informed of the appointment of the new groundhandling companies. While most of the airlines, including Kingfisher, are willing to accept the new formula, it is understood that Jet Airways, which does its own groundhandling for both the terminal and the ramp sides, has reservations on outsourcing it to a third party.
“Jet Airways has always maintained that it would want to handle its flights as well as the passengers at the terminal,” said a Jet Airways spokesperson.

According to sources, Kingfisher Airlines, which recently announced an alliance with Jet Airways, in which one of the points was substantial cost savings on account of having common groundhandling, has decided to go with the commissioned agencies at these airports. “We were not able to work out sharing of groundhandling with Jet Airways and we have decided to go with the agencies at the Mumbai and Delhi airports. Moreover, the contractual parties have offered reasonable rates to the airlines,” said a Kingfisher executive, not wanting to be identified.

Some other airlines, like Jet, SpiceJet and GoAir, have maintained in the past that the implementation of the new groundhandling policy from January 1 next year will render at least 8,000 people jobless, a sticky issue in the current economic environment. Airlines earlier locked horns with Hyderabad International Airport operator GMR, citing steep charges as the reason for not cooperating with the commissioned parties at this airport.
24/11/08 Manisha Singhal/Business Standard

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Categories: Airports Nov 2008