Norms revised to enable AIATSL sale

The attempt to privatise AIATSL, one of the few profitable entities of the national carrier, was launched in February.

Photo for representational purpose only.

The government has revised a contentious clause in the ground-handling regulations to enable the sale of Air India’s subsidiary, Air India Air Transport Services Limited (AIATSL), allowing the new buyer to retain its businesses across 76 airports for seven years.

The attempt to privatise AIATSL, one of the few profitable entities of the national carrier, was launched in February but met with several delays after interested bidders raised queries about the tenure of assured business from Air India, grandfather rights of the ground-handling company at 76 airports it provides services to, severance package for employees and the like.

As per the Airports Authority of India Ground (Handling Services) Regulation, 2018, the new buyer of AIATSL can enjoy grandfather rights for ‘thirty six’ months, which has been changed to ‘eighty four’ months, according to a senior official of the Ministry of Civil Aviation. The gazette notification is likely to be issued soon. “The issue of AIATSL’s grandfather rights was a deal-breaker and the government’s decision to change the ground-handling rules is a deal-maker,” one of the interested bidders said.

A senior representative of another ground-handling firm said the move was “definitely a good change.”

The Ministry has also revised the definition of ground-handling agency, which will now be an entity “with distinct and independent existence at the airport” providing ground-handling service. This is expected to discourage manpower suppliers from bidding for business, which was a practice until 2017.

Stumbling blocks remain

However, some stumbling blocks still remain.

Interested players would like some assurance from the Airports Authority of India (AAI), which owns more than 100 airports, on the terms of bidding for ground-handling operations at its airports as and when it floats a fresh tender as well as how many ground handlers it would allow at the same airport.

Bidders wary

Ground-handling operators are wary after the AAI made an effort last year to award new contracts and shortlisted players who had promised steep royalties, making AIATSL unviable for private players as they would have to match quotes provided by their competitors at each airport.

AAI later cancelled the whole process.