The Indian aviation industry is facing turbulence. An implementation push in the ground handling space can help matters
Low air fares and punctuality are certainly crucial but not the only factors that determine if one would want to fly with an airline again. The flying experience rests on a host of other factors like did your bags reach the belt before you did and was it received in good condition? Did you board the flight to find a spotless seat or were there leftovers of the previous flyer languishing around? All of these factors rest on the efficiency of the ground handling staff. It is a behind-the-scenes service, albeit essential with an immense potential. Done right, it can help airlines effortlessly cut down costs while ensuring the airports save on premium space. Undoubtedly, the aviation sector plays an important role in India’s economy, and generates over two lakh crore rupees in revenues and more than 2.4 million jobs, directly and indirectly. The sector has seen phenomenal growth — 16 per cent, annually — in the last decade and is currently the third largest in the world.
India’s airports currently handle 183.90 million passengers a year. Reportedly, at least 20 cities will need a second airport by 2030 and by 2035, more cities are expected to join this list. With an investment of one lakh crore rupees lined up in the next five years and a target of a billion passenger trips a year, the Government, too, is committed towards building airport capacity and regional connectivity through initiatives like Nabh Nirman and UDAN. However, the aviation industry needs to handle multiple challenges to be able to fly really high. Growth of this sector has been marred by volatile fuel prices, depreciating rupee and cut-throat competition. For most airlines, it is a tightrope walk with the danger of slipping back in the red. As a result, most airlines are price-sensitive and scrap the bottom for profits. The situation is further compounded by infrastructural constraints. According to data tabled in Parliament on August 2, 2018, nearly one-third of the 7,200 complaints received in the last 20 months against domestic air carriers were related to flight delays, arising mostly due to congestion at airports. One of the key issues that can prove to be a lifeline for the aviation sector is the labour and capital-intensive specialised function of ground handling.
Ground handling services include passenger and baggage handling, aircraft cleaning and servicing, providing specialised equipment required by a plane and movement of cargo and passengers. Airlines want these activities to be completed quickly and cheaply for better turnaround. An airline, that opts to do self-handling, will have to hire people on its rolls and invest heavily on infrastructure required for the ground handling operation, that too, at every airport in its network. Even a single high loader can cost over three crore rupees and this does not include equipment maintenance and insurance costs. Outsourcing ground handling to informal labour contractors involves security hazards as it would entail a large number of floating non-bonafide manpower operating in sensitive zones of airports. On the other hand, if ground handling is done by a certified agency, it will hardly account for two per cent of an airline’s total expense and save them from investing in expensive equipment and taking manpower on their rolls. It makes sense for the airlines to outsource this activity to certified agencies and deploy savings as capex for further expansion. They can even be passed on to the flyers. Moreover, think of the amount of premium space an airport will have to spare to accommodate ground handling resources of all the airlines operating on its base. It is at best a wasteful exercise. A certified ground handling agency minimises an aircraft’s turnaround time, eases air traffic as well as decongests the airports. Armed with standard operating procedures and specialisation, they bring economies of scale to the table by deploying the same manpower and equipment to serve multiple airlines. It is win-win for all.
At a time when airlines are cash-strapped, the risk of quality and safety being compromised at the hands of non-professional players hired to cut costs, is a threat to the well-being of the sector. Enabling policies to promote the use of certified ground handling services exist on paper. The delay, however, lies in implementation. The Ministry of Civil Aviation (Ground Handling Services) Regulations, 2017, state that airlines can either do self-handling or engage certified agencies for ground handling. They are not permitted to hire contractors that are non-bonafide and non-certified for the task. Regulations had given a lead time of eight months to airlines to dispense with hiring contract labour. However, the latest notification by Airports Authority of India has extended this deadline till June 30, 2019. Most domestic airlines either continue to outsource the function to non-certified private contractors or are self-handling. Barely one-third of the overall ground handling business (domestic and international) is, therefore, currently available to certified private agencies, making it a challenging business proposition despite the benefits that accrue to the sector as a whole. The need of the hour is to create an enabling ecosystem to nurse the aviation sector back to health.
(The writer is a retired Air Commodore, Indian Air Force)