Ministry-airlines meeting on ground handling inconclusive

The government and airlines appear to be at loggerheads over implementation of the much delayed ground handling policy.

Ground handling involves passenger handling at terminal side (baggage loading, etc) as well as on the airside (loading and unloading of aircraft and aircraft handling).

In a meeting with the civil aviation secretary and other senior ministry officials on Tuesday, the Federation of Indian Airlines (FIA) made it clear that it wants airlines to be allowed to do self-handling of such operations.

Speaking after the meeting, FIA secretary-general Anil Baijal told DNA Money, “We want self-handling. If it is inefficient or does not provide value for money, market forces will automatically make it redundant. Why should only three designated operators be allowed to do the entire ground handling?”

The ground handling policy envisages only three ground handling agencies — airport operator or a joint venture, subsidiaries of Air India or its JVs and service providers selected through competitive bidding — and rules out any self-handling by private airlines. Airlines would have to relinquish ground handling across Mumbai, Delhi, Chennai, Kolkata, Bangalore and Hyderabad airports.

When asked whether a proposal (being considered by the government) on allowing terminal-side handling by airlines would be acceptable, Baijal reiterated “We want complete self-handling, not parts of ground handling operations.”

But official sources made it clear the airlines’ demand was difficult to accept. “The secretary suggested during the meeting that if airlines are keen on self-handling, they could form a consortium or even come under the aegis of FIA itself and participate in competitive bidding! The Bangalore International Airport has been doing pretty well with two private ground handlers,” they said.

Sources also countered airlines’ suggestion of letting market forces decide by observing that too many players would upset the economies of scale needed for ground handling services at any airport.

On airlines’ claims of the new policy adversely affecting large numbers of their ground handling staff, sources said that almost 70% of airlines’ ground handling staff was already outsourced and can easily be absorbed by any of the three parties who will become eligible from January next year.

Also, sources sought to make a distinction between express cargo airlines (like Blue Dart and FedEx) and passenger carriers. They said the express cargo carriers need to perform the entire ground handling function themselves since they do door-to-door delivery for small packages.

Under the new policy, functions such as loading, unloading and delivery of baggage from the aircraft, cabin cleaning, delivery of passengers from terminal to tarmac and vice-versa — all of these would go out of the private airlines’ purview.

The airlines have also observed in the past that this policy would deprive them of all consumer interface before passengers board their flights, besides also leading to cost escalation. Some airlines already claim cost escalation of up to 10 times at international airports such as Cochin and Bangalore, where private parties conduct ground-handling services.