After DIAL, Mumbai airport now asks carriers for bank guarantees

New Delhi: To guard against defaults by airlines, the operator of India’s busiest airport at Mumbai has asked all carriers to provide bank guarantees to cover payments by the end of this month.
The move, already enforced by Delhi International Airport Pvt. Ltd (DIAL), comes after some domestic carriers defaulted on payments to vendors since last year, when losses jumped 44%.
Local airline firms lost Rs8,557.37 crore in the fiscal year ended 31 March, making it the worst year on record for an industry beset by high costs, excess capacity and a slump in passenger traffic.
A GVK Power and Infrastructure Ltd-led consortium, which runs the Mumbai International Airport Pvt. Ltd (Mial), has asked the airlines in a letter to increase their bank guarantees. Mint has reviewed a copy of the letter issued on 20 October.
The carriers are now required to maintain a security deposit with Mial via bank guarantees equal to two months of aeronautical billing and six months of non-aeronautical billing, the letter said.
The airlines typically provide a two-month security deposit for aeronautical charges such as landing, parking and navigation fees. After the new directive, they will be required to also provide bank guarantees for all non-aeronautical charges such as rentals for airlines counters, hangars, etc.
The local and international airline firms together owe Mial around Rs180-190 crore, a Mumbai airport official said. He spoke on condition of anonymity, citing the sensitive nature of the matter.
24/11/09 Tarun Shukla/Live Mint

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Categories: Airports Nov 2009