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CAPA India Ground Handling Report 2014 Table of Contents & Sample Extracts
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Table of Contents Glossary.............................................................................................................................. 2 Executive Summary ............................................................................................................ 4 Global Overview of Ground Handling ............................................................................... 24 India Aviation Overview ................................................................................................... 45 Passenger traffic ....................................................................................................................... 45 Air transport movements .......................................................................................................... 46 Cargo traffic .............................................................................................................................. 48 Fleet Size ................................................................................................................................... 49 CAPA traffic and movements forecast to FY2023 ....................................................................... 50 Profiles of 10 Largest Indian Airports ................................................................................ 59 Delhi Airport ............................................................................................................................. 59 Mumbai Airport ........................................................................................................................ 67 Bengaluru Airport ..................................................................................................................... 75 Chennai Airport ......................................................................................................................... 82 Kolkata Airport .......................................................................................................................... 89 Hyderabad Airport .................................................................................................................... 95 Cochin Airport ......................................................................................................................... 102 Ahmedabad Airport ................................................................................................................ 108 Goa Airport ............................................................................................................................. 114 Pune Airport ........................................................................................................................... 119 SWOT Analysis of Metro Airports from a Ground Handler’s Perspective ........................ 125 Bengaluru Airport ................................................................................................................... 125 Hyderabad Airport .................................................................................................................. 126 Chennai Airport ....................................................................................................................... 127 Kolkata Airport ........................................................................................................................ 128 Mumbai Airport ...................................................................................................................... 129 Delhi Airport ........................................................................................................................... 130 Ground Handling Market in India ................................................................................... 131 Ground Handling Costs ................................................................................................... 137 Subcontracting of Ground Handling Activities ................................................................ 143 Regulatory Framework ................................................................................................... 147 Profiles of Key Ground Handlers ..................................................................................... 153 INDIA
Air India SATS Airport Services ................................................................................................ 154 Bhadra India ............................................................................................................................ 157 Bird Worldwide Flight Services (BWFS) .................................................................................... 159 Cambata Aviation Pvt. Ltd. ...................................................................................................... 161 Çelebi India ............................................................................................................................. 163 Çelebi NAS Airport Services India Pvt. Ltd. ............................................................................... 165 GlobeGround India .................................................................................................................. 167 Indo Thai ................................................................................................................................. 169 Menzies Group ........................................................................................................................ 171 SWOT Analysis of Key Ground Handlers ......................................................................... 174 Delhi Airport – AISATS Airport Services Pvt. Ltd. ...................................................................... 174 Delhi Airport – Cambata Aviation Pvt. Ltd. .............................................................................. 175 Delhi Airport – Çelebi Ground Handling Delhi Pvt. Ltd. ............................................................ 176 Delhi Airport – Bird Worldwide Flight Services Pvt. Ltd. ........................................................... 178 Mumbai Airport – Air India ...................................................................................................... 179 Mumbai Airport – Cambata Aviation Pvt. Ltd. ......................................................................... 180 Mumbai Airport – Çelebi‐NAS Airport Services India Pvt. Ltd. .................................................. 181 Bengaluru Airport – AISATS Airport Services Pvt. Ltd. .............................................................. 182 Bengaluru Airport – GlobeGround (India) Pvt. Ltd. .................................................................. 183 Chennai Airport – Air India ...................................................................................................... 184 Chennai Airport – Bhadra International India Ltd. ................................................................... 185 Chennai Airport – Cambata Aviation Pvt. Ltd. .......................................................................... 186 Kolkata Airport – Bhadra International India Ltd. .................................................................... 187 Kolkata Airport – Air India ....................................................................................................... 188 Hyderabad Airport – AISATS .................................................................................................... 189 Hyderabad Airport – Menzies Bobba Ground Handling Services Pvt. Ltd. ................................. 190 Selection of Ground Handlers by Airlines ........................................................................ 191 Introduction ............................................................................................................................ 191 Delhi Airport ........................................................................................................................... 193 Mumbai Airport ...................................................................................................................... 193 Chennai Airport ....................................................................................................................... 194 Kolkata Airport ........................................................................................................................ 195 Bengaluru Airport ................................................................................................................... 195 Hyderabad Airport .................................................................................................................. 196 INDIA
CAPA Survey of Key Stakeholders ................................................................................... 198 Ground Handlers ..................................................................................................................... 198 Airlines .................................................................................................................................... 202 Airport Operators .................................................................................................................... 207 General Aviation ..................................................................................................................... 212 Analysis of Ground Handling Tariffs at Metro Airports in India in FY2014 ....................... 214 Delhi Airport ........................................................................................................................... 214 Mumbai Airport ...................................................................................................................... 215 Chennai Airport ....................................................................................................................... 217 Kolkata Airport ........................................................................................................................ 219 Bengaluru Airport ................................................................................................................... 220 Hyderabad Airport .................................................................................................................. 221 Appendices ..................................................................................................................... 223 Appendix A: Domestic air transport movements by aircraft type ............................................ 223 Appendix B: Ceiling rates of ground handling services at metro airports in India ..................... 224 Appendix C: List of ground handling subcontractors at metro airports in India ........................ 225 Appendix D: List of ground/cargo handlers at Indian airports .................................................. 226 Appendix E: Minimum and average wage rates of personnel in ground handling ..................... 228 Appendix F: List of ground/cargo handlers covered under study for financial analysis ............. 229 Appendix G: Financial analysis of ground/cargo handling firms at Delhi Airport ...................... 231 Appendix H: Financial analysis of ground/cargo handling firms at Bengaluru Airport ............... 247 Appendix I: Financial analysis of ground/cargo handling firms at Bengaluru Airport ................ 263 Appendix J: Financial Analysis of ground/cargo handling firms at Kolkata Airport ................... 268 Appendix K: Financial Analysis of ground/cargo handling firms at Hyderabad Airport ............. 270 Appendix L: Financial Analysis of ground/cargo handling firms at Lucknow, Jaipur airports ..... 271 Appendix M: Financial Analysis of ground/cargo handling firms at Cochin Airport ................... 272 Appendix N: Financial Analysis of ground/cargo handling firms at Bhubaneshwar Airport ....... 274 Appendix O: Financial analysis of ground/cargo handling firms at Trivandrum airport............. 275 Appendix P: Ground support equipment with select designated ground handling firms .......... 276 INDIA
CAPA India Ground Handling Report 2014 INDIA
Figure 12: Air traffic movements by aircraft type, FY13 Market segment
Domestic
Narrow‐ body 99% International
Wide body
1% Narrow‐body 30–40%
Wide body
60‐70%
Source: CAPA Research, AirportIS Note: Wide body operations on domestic routes were mainly positioning flights The majority of Indian domestic routes have a flight time of 2.5 hours or less making them most suitable for narrow body or regional aircraft. In the future, on high density routes at slot‐constrained airports such as Mumbal we may see the deployment of wide body aircraft, however these will account for a relatively small share of the national total. International services operated by foreign carriers are dominated by wide body aircraft, however the proportion of narrow body equipment has been increasing as a result of the entry of low cost carriers operating regional international routes to India from the Gulf and Southeast Asia. And going forward, re‐engined A320neos and 737 MAX aircraft will be economical over a longer range making them suitable for deployment to a larger number of international destinations. Table 5: Top 10 markets for passenger handling, international services, wide body aircraft, FY13 Airport Estimated market size (USD million/year) Delhi Mumbai Chennai Bengaluru Cochin Hyderabad Kolkata Trivandrum Calicut Ahmedabad xx.x – xx.x xx.x – xx.x xx.x – xx.x xx.x – xx.x xx.x – xx.x xx.x – xx.x xx.x – xx.x xx.x – xx.x xx.x – xx.x xx.x – xx.x Source: CAPA Research © 2014 CAPA India 34 CAPA India Ground Handling Report 2014 INDIA
Figure 13: Estimated value of market segments for ground handling Market segment Domestic services
International services
Indian carriers Indian carriers
(USD xx million
(USD xx million) ‐ Foreign carriers (USD xx million)
Source: CAPA Research The international ground handling market in India, which is the aggregate of Indian and foreign carriers operating international services, was estimated at USDxx million in FY13 and represented more than xx% of the market opportunity, see Figures 14 and 15. The international segment was estimated at xx% Indian and xx% foreign carriers. Figure 14: Estimated average market opportunity by customer segment, FY13 (USD million)* xx
xx
Domestic flights
International flights (domestic carriers)
xx
International Flights (foreign carriers)
Source: CAPA Research © 2014 CAPA India 36 CAPA India Ground Handling Report 2014 INDIA
Figure 15: Relative share of domestic and international handling market by value, FY13 (%) 28%
Domestic
International
72%
Source: CAPA Research, CAPA estimates that Delhi was the largest ground handling market in India for both domestic and international services. The top 10 market opportunities for domestic ground handling services are listed in Table 8 and those for international services are provided in Table 9. Table 8: Estimated top 10 market opportunities for ground handling – Domestic Airport Delhi Mumbai Bengaluru Chennai Kolkata Hyderabad Ahmedabad Guwahati Pune Goa Market size (USD million/year) xx.x – xx.x xx.x – xx.x xx.x – xx.x xx.x – xx.x xx.x – xx.x xx.x – xx.x xx.x – xx.x xx.x – xx.x xx.x – xx.x xx.x – xx.x Source: CAPA research Table 9: Estimated top 10 market opportunities for ground handling – International Airport Delhi Mumbai Chennai Cochin Calicut Bengaluru Hyderabad Kolkata Trivandrum Ahmedabad Market size (USD million/year) xx.x – xx.x xx.x – xx.x xx.x – xx.x xx.x – xx.x xx.x – xx.x xx.x – xx.x xx.x – xx.x xx.x – xx.x xx.x – xx.x xx.x – xx.x Source: CAPA research © 2014 CAPA India 37 CAPA India Ground Handling Report 2014 INDIA
Royalty charges at metro airports Figure 17: Royalty charges at metro airports S.No. Airports Ground handling firms Royalty charges 1 Delhi AISATS Airport Service Pvt. Ltd xx% on the revenue earned as per the ceiling rates xx% on gross revenues xx% on gross revenue Bird Worldwide Flight Services(India)Pvt. Ltd. Cambata Aviation Pvt. Ltd. Çelebi Ground Handling Delhi Pvt. Ltd. xx% on gross revenues or 12.75% on revenues earned as per the ceiling rates 2 Mumbai Air India Cambata Aviation Pvt. Ltd. Çelebi‐NAS Airport Services India Pvt. Ltd. xx% of gross revenue xx% on gross revenues xx% on gross revenues 3 Chennai Air India Bhadra International India Ltd Cambata Aviation Pvt. Ltd. n/a xx% on gross revenues xx% on gross revenues 4 Kolkata Air India Bhadra International India Ltd n/a xx% on gross revenues 5 Bengaluru AISATS Airport Service Pvt. Ltd Globe Ground xx xx 6 Hyderabad AISATS Airport Service Pvt. Ltd Menzies Bobba Ground Handling Services Pvt. Ltd. xx% on revenue earned from international sector xx% on revenue earned from international sector Source: CAPA Research, AERA, Company filings Note: n/a ‐ Not available © 2014 CAPA India 47 CAPA India Ground Handling Report 2014 INDIA
The estimated manpower cost per process at the six metro airports is presented in Tables 13 and 14. These are aggregated costs and vary by metro, depending on minimum wage requirements, cost of living, and market forces in each metro. Manpower allocation varies largely depending on the type of operation (domestic or international). Table 13: Average manpower costs for metro airports by process* Domestic flights, FY13 (USD/day) Airport Cabin cleaning Ramp Passenger processing x x x x x x xx xx xx xx xx xx xx xx xx xx xx xx Delhi Mumbai Kolkata Hyderabad Bengaluru Chennai Source: CAPA Research, *costs have been averaged out across airlines Table 14: Average manpower costs for metro airports by process* International flights, FY13 (USD/day) Airport Cabin cleaning Ramp Passenger processing x x x x x x xx xx xx xx xx xx xx xx xx xx xx xx Delhi Mumbai Kolkata Hyderabad Bengaluru Chennai Source: CAPA Research, *costs have been averaged out across airlines Asset costs Asset costs for various processes are largely the same across airports and do not vary by geography. These costs are largely driven by the nature of the equipment and vary by the type of aircraft. CAPA has developed estimates for asset costs for both hub as well as spoke stations, based on exhaustive research and primary research, and these are presented in Tables 15 and 16. These estimates reflect the costs of new assets, as required under the policy. However, it has in the past been common to see a large secondary market for the purchase of equipment. Actual costs may vary depending on volume purchases, depreciated values, negotiating power, and the useful life of the equipment. © 2014 CAPA India 51 CAPA India Ground Handling Report 2014 INDIA
Table 15: Minimum equipment required for narrow body flights at a spoke station and indicative costs, FY13 S.No. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Equipment Number(s) required Unit cost (USD) 1 4 1 2 1 2 2 1 1 1 1 2 1 2 6 xx – xx xx – xx xx – xx xx – xx xx – xx xx – xx xx – xx xx – xx xx – xx xx – xx xx – xx xx – xx xx – xx xx – xx xx – xx Aircraft wheel chocks Baggage dollies Crew coach Diesel tractor Ground power unit Marshalling torch pads Motorised conveyor belt Motorised passenger stairs Passenger coach Push back (narrow body) Tow bars (Code C) Towable conveyor/belt loader Towable step ladder(A320) Wheel chairs Cones Source: CAPA Research Table 16: Minimum equipment required for narrow body flights at a hub airport and indicative costs, FY13 Equipment Air conditioning unit (65 tonnes) Air start unit Aircraft wheel chocks Baggage dollies Crew coach Diesel tractor Ground power unit Marshalling torch pads Motorised conveyor belt Motorised passenger stairs Passenger coach Push back (narrow body) Toilet cart Tow bars (Code C) Towable conveyor/belt loader Towable step ladder (A320) Water cart Wheel chairs Cones Fuel Insurance © 2014 CAPA India Number(s) required Unit cost (USD) 1 1 4 4 1 2 1 1 2 2 2 1 1 1 2 1 1 4 4 ‐ ‐ xx – xx xx – xx xx – xx xx – xx xx – xx xx – xx xx – xx xx – xx xx – xx xx – xx xx – xx xx – xx xx – xx xx – xx xx – xx xx – xx xx – xx xx – xx xx – xx Variable xx% ‐ xx% of asset value 52 CAPA India Ground Handling Report 2014 INDIA
Delhi Airport air traffic movements by aircraft type: International departures by Indian carriers Aircraft Type 737‐800 winglets pax/BBJ2 A320 777‐300ER passenger A319 A330‐200 737 passenger 777‐200LR passenger A321 737‐800 passenger 787‐800 737‐900 passenger A330‐300 A330 Grand Total Departures ‐ FY13 2,859 2,635 2,086 1,521 1,175 1,076 947 921 337 261 191 38 10 14,057 Source: CAPA, Airport IS Delhi Airport air traffic movements by aircraft type: International departures by foreign carriers Aircraft Type A330‐300 A320 777‐200/200ER Passenger A330‐200 777‐300 passenger 767‐300 passenger 777 passenger 737‐800 passenger A330 747‐400 passenger A340‐600 A319 757‐200 passenger 777‐200LR passenger A321 A310 767 passenger 767‐200 passenger 737‐300 A340‐300 747‐8 passenger 777‐300ER passenger MD‐82 747 passenger © 2014 CAPA India Departures ‐ FY13 2,543 2,376 1,541 1,334 963 892 879 770 658 533 510 504 501 487 457 391 365 309 261 251 233 227 192 154 58 CAPA India Ground Handling Report 2014 INDIA
MD‐11 passenger A340 MD‐83 787‐800 737‐500 757 passenger 787 737‐700 winglets pax/BBJ1 737‐200 A300‐600 passenger B727 passenger 757‐200 winglets passenger 737‐700 passenger 767‐400 passenger A340‐500 E‐190 737 passenger Grand Total 137 97 63 62 44 43 41 32 19 19 15 8 2 2 2 2 1 17,920 Source: CAPA, Airport IS Ground handling costs per Departure: LCCs As per CAPA estimates derived from a proprietary model and extensive primary research, handling costs for low cost carriers on a per departure basis out of Delhi are estimated as below: Airline Aircraft Cost per departure (INR) IndiGo SpiceJet SpiceJet GoAir A320 737 Q400 A320 xxx ‐ xxx xxx – xxx xxx – xxx xxx ‐ xxx Source: CAPA research Note: all asset costs are capitalised and based on the assumption that investment is made in the minimum equipment required to service the current volume of departures. As the headquarters for SpiceJet and IndiGo, the costs at Delhi also include an allocation for management and training costs. Ground handling costs per Departure: FSCs Estimated handling costs per departure for full service carriers are as below: Airline A/C Air India Jet Narrow body (dom) Wide body (Intl.) Narrow body (dom) Wide body (Intl.) Cost per departure (INR) xxx ‐ xxx xxx – xxx xxx – xxx xxx ‐ xxx Source: CAPA research Note: all asset costs are capitalised and based on the assumption that investment is made in the minimum equipment required to service the current volume of departures. For Air India this includes management and training costs; numbers for Jet include regional aircraft but exclude JetKonnect. © 2014 CAPA India 59 CAPA India Ground Handling Report 2014 INDIA
Number of outsourced employees According to CAPA Research findings — based on extensive engagement with key stakeholders — the level of outsourcing of manpower for domestic operations is lower than that for international operations for both cabin cleaning and ramp handling. Table 18 presents the number of outsourced employees per departure for these two activities. Table 18: Number of outsourced staff per departure by activity Domestic operations International operations Cabin cleaning* Ramp** x – x xx ‐ xx xx ‐ xx xx ‐ xx Source: CAPA Research, company filings *Cabin cleaning figure includes lavatory and potable water services **Ramp figure includes manpower for baggage transportation, sorting, and airside loading/unloading Table 19 presents CAPA estimates for the number of outsourced employees at the top 10 Indian airports. We developed these numbers on the basis of our proprietary model of labour requirements by activity supported by on‐the‐ground industry inputs. Table 19: Number of outsourced ground handling staff at top 10 airports Airport Delhi Mumbai Bengaluru Chennai Hyderabad Kolkata Cochin Ahmedabad Pune Goa Number of outsourced employees xxxx ‐ xxxx xxxx ‐ xxxx xxxx ‐ xxxx xxxx ‐ xxxx xxxx ‐ xxxx xxxx ‐ xxxx xxxx ‐ xxxx xxxx ‐ xxxx xxxx ‐ xxxx xxxx ‐ xxxx Source: CAPA research These outsourced employees are over and above those on the direct payrolls of the ground handling firms. If the final policy ruling prohibits subcontracting as the government is seeking to achieve, these staff will have to be employed directly by the authorised ground handling firms. This will drive up overall labour costs because most of the subcontracted labour is currently employed on the basis of daily wages (often below the minimum rate), with no tenure and few if any additional benefits such as leave, provident fund and medical. Formalising their employment on terms compliant with statutory regulations and providing a safe working environment will result in increased costs. Handling firms will need to further invest in training these staff to increase their productivity to mitigate the increased expenses. © 2014 CAPA India 111 CAPA India Ground Handling Report 2014 INDIA
Currently, the volume of manpower outsourced by the five private domestic airlines is greater than the number of handling‐related employees that they employ directly. Figure 20 provides the number of on‐roll and outsourced staff engaged in handling activities for the five Indian airlines at the six metro airports. Figure 20:Employment status of staff engaged in handling activities for the five Indian carriers at the six metro airports, FY11 Outsourced
6,210 (39%)
On payroll
9,744 (61%)
Source: CAPA, High Court filing Employee strength of ground handling firms In FY12, eight ground handling firms—Air India, Cambata, Çelebi NAS, Bird Worldwide Flight Services (BWFS), Bhadra International, Globe Ground, Çelebi and Indo Thai — handled the majority of aircraft departures at Indian airports. These ground handling firms employed close to 25,000 staff. They also make some use of subcontracting agencies however in the case of the authorised ground handlers this represents less than 5% of their total staff deployment. Table 20: Number of employees with designated GH firms Company Air India Limited Bhadra International India Ltd. Bird Worldwide Flight Services Cambata Aviation Pvt. Ltd Çelebi Ground Handling Delhi Pvt. Ltd. Çelebi–NAS Airport Services India Pvt. Ltd. Globe Ground India Indo–Thai Airport Management Services Pvt. Ltd Total Employee strength (FY12) 10,481 1,396 1,979 7,000 678 2,125 1,017 93 24,769 Source: CAPA Research, Company filings, AERA Note: numbers may include outsourced manpower © 2014 CAPA India 112 CAPA India Ground Handling Report 2014 INDIA
Major subcontractors at metro airports Outsourced manpower is usually provided by subcontractors (defined as firms providing manpower or GSE services to designated ground handlers or airlines that are self‐handling). There are several subcontractors present throughout the country and it is a largely unstructured and unorganised market. Major subcontractors for the six metro airports are listed in Table 21. Table 21: Major subcontractors at metro airports Station Supplier Services Delhi Lion Manpower Solutions Pvt. Ltd. Neha Aviation Services Aroon Aviation Services Sunshine Enterprises Agarwal Packers and Movers JAC Air Services Livewel Aviation Turbo Aviation Taurus Aviation Visskan Aviation Airawat Aviation Services Steader International Krystal Aviation Manpower supplier GSE provider, manpower supplier GSE provider, manpower supplier Manpower supplier Manpower supplier Manpower supplier Aircraft cleaning services GSE provider, manpower supplier GSE provider, manpower supplier GSE provider, manpower supplier GSE provider, manpower supplier GSE provider, manpower supplier Livewel Aviation Visskan Aviation GSE provider, manpower supplier GSE provider, manpower supplier GSE provider, manpower supplier Hyderabad Mumbai Bengaluru Kolkata Chennai Décor Drapes Aviation Services Pvt. Ltd./Décor Aviation Pvt. Ltd Bengaluru Airport Terminal Services JP Aviation Services Able Aviation Jai Santoshi Maa Ideal Cleaning Transtrack Services Star Aviation Services Universal Aviation Services Kazi Aviation Krystal Aviation Services Santham Contractors GSE provider, manpower supplier, catering services Cabin cleaning services, ground handling Manpower supplier Manpower supplier, handling services Manpower supplier Cabin cleaning Manpower supplier GSE provider, manpower supplier GSE provider, manpower supplier GSE provider, manpower supplier Manpower supplier Manpower supplier Source: CAPA Research © 2014 CAPA India 113 CAPA India Ground Handling Report 2014 INDIA
Financial analysis – Çelebi Ground Handling Delhi Pvt. Ltd. Key financial results (USD million) FY12* FY11* FY10 Total income Total expenditure Interest Profit/(loss) before tax Provision for income tax 5.84 4.90 1.63 (3.26) 0.00 1.7 (5.1) n/a (3.5) 0.0 n/a n/a n/a n/a n/a Net income (3.26) (3.5) n/a 8.89 12.76 13.13 11.57 1.68 9.89 2.46 2.19 0.28 0.50 n/a 23.15 12.0 11.1 23.1 11.3 1.2 10.2 10.2 1.2 9.0 0.1 3.8 23.1 11.2 0.0 11.2 0.0 0.0 0.0 11.1 0.3 10.8 0.0 0.3 23.1 FY12 FY11 FY10* (55.73)% (55.73)% (15.53)% n/a 1.44 1.13 204.2% 203.7% (14.9)% n/a 0.9 8.5 n/a n/a n/a n/a 0.0 38.9 Key ratios Profitability EBIT/operating income PAT/operating income ROCE Solvency Interest coverage Debt‐to‐equity ratio Liquidity Current ratio 

Shareholders' equity Debt Total liabilities Gross fixed assets Depreciation Net fixed assets Current assets Current liabilities Net current assets Other assets Profit and loss account Total assets 

The ground handling business is marked by high operating leverage, as the majority of costs are fixed. Consequently, Çelebi Ground Handling being in its second year of operations reported a loss of USD3.26 million in FY12. Çelebi has been aggressively pursuing new clients for growth in a price‐
sensitive market, which is evident in its growing revenues but declining net profit. The company’s current ratio fell in FY11 and FY12. This can be attributed to the loans it took for expansion in FY11 and the increase in interest payments due to the subsequent depreciation of the Rupee. Source: CAPA Research, MCA,* some numbers are CAPA estimates and do not represent actuals. © 2014 CAPA India 125 CAPA India Ground Handling Report 2014 INDIA
Rating agency inputs for Çelebi Ground Handling Delhi Pvt. Ltd. Rating assigned to various bank facilities Facilities Long‐term bank facilities Short‐term bank facilities Total Amount (INR mn) 750 600 1350 Current Rating CRISIL BB (reaffirmed) CRISIL A4 (reaffirmed) Previous Rating CRISIL BB CRISIL A4 Source: CAPA Research, CRISIL, as of Feb 11, 2013 © 2014 CAPA India 126 CAPA India Ground Handling Report 2014 INDIA
Capex plans by ground handling firms at selected airports Sr. No. Airports Ground Handler Capex Projections (INR Million) 1 Delhi 2 Mumbai 3 4 5 6 Bengaluru Hyderabad Cochin Ahmedabad BWFS Cambata Çelebi Cambata Çelebi‐NAS GlobeGround Menzies Bobba BWFS Cambata FY13 x.x x.x x.x x.x x.x x.x x.x x.x x.x FY14 x.x x.x x.x x.x x.x x.x x.x x.x x.x FY15 x.x x.x x.x x.x x.x x.x x.x x.x x.x Source: CAPA Research, industry sources, AERA © 2014 CAPA India 155 CAPA India Ground Handling Report 2014 INDIA
Airport Ground handlers Varanasi Air India Nagpur Air India NAS Amritsar Air India Indo Thai Srinagar Air India Indo Thai Guwahati Air India Rudra Aviation NAS Indo Thai Source: CAPA Research Findings of CAPA survey on ground handling operations in India Policy and regulations The ground handling policy was partially implemented at the metro airports, with airport operators selecting third party ground handlers through an international competitive bidding process. The policy proposed the exit of subcontractor handling firms. Subcontracting plays a major role in the Indian ground handling industry. These subcontractors provide either manpower. However, most of these companies are very small in size, with presence at only one or two airports. The directive to end subcontracting has not been implemented and remains sub judice. Most PPP airport operators were of the view that the policy should be fully implemented with some modification. Table 27 collates the views of airport operators on the ground handling policy. Table 27: Views of airport operators on the ground handling policy Impact category Infrastructure impact © 2014 CAPA India Key impact Improved equipment utilisation Improved standard of equipment Remarks Limiting the number of ground handling operators would improve equipment utilisation. The proposed policy allows ground handling firms to achieve scale in their operations by:  limiting the number of licensed ground handling firms at the airport and;  prohibiting subcontracting of GH activities. 172 CAPA India Ground Handling Report 2014 INDIA
Labour laws Human Resource Impact Safety and security impact Improved compliance with labour laws Improved quality of workforce Reduced attrition Increased staff utilisation Enhanced safety Enhanced security This should in turn justify the induction of more expensive IATA‐standard ground handling equipment. According to several airport operators, subcontractors commonly violate labour laws by not paying benefits or for that matter the minimum wage in order to support a low cost base. However, the licensed ground handlers are believed to comply with statutory requirements. Subcontractors usually provide untrained and unskilled labour for ground handling activities. The move to licensed handlers is expected to result in greater investment in training and the development of a higher quality labour force. Subcontractors usually deploy temporary labour and do not follow standard HR policies with respect to tenure. With the implementation of the proposed policy, only permanent workers will be permitted in ground handling activities. Employees will benefit from enhanced working terms and conditions which in turn should lower the attrition rates. With airlines forced to use one of the designated handlers at an airport rather than self‐handling this should result in more efficient deployment of staff as resources can be shared across carriers. Only trained staff will be allowed to operate equipment. Licensed handlers are expected to have a greater focus on occupational health and safety than the current subcontractors. The greater deployment of permanent staff, employed by a handful of licensed, professional companies should improve the ability to monitor personnel for security purposes. The current multiplicity of companies employing itinerant and unskilled workers for airside roles is unmanageable. Source: CAPA Research © 2014 CAPA India 173 CAPA India Ground Handling Report 2014 INDIA
Table 30: Proposed and approved comprehensive tariffs for ground handling of scheduled passenger aircraft by AISATS Aircraft type Code B Code C Code D Code E Code F Domestic (INR) International (INR) Proposed charges Charges approved by AERA 14,351 12,700 12,204 10,800 19,323 17,100 64,410 57,000 114,582 101,300 Proposed charges Charges approved by AERA 55,700 93,200 153,100 180,000 251,000 63,054 105,316 173,003 203,287 282,630 Source: CAPA Research, AERA Mumbai airport In FY14, the following three ground handling firms were operating at Mumbai airport: 
Air India Limited  Cambata Aviation Pvt. Ltd.  Çelebi NAS Airport Service Pvt. Ltd. Table 31 below provides AERA‐approved tariffs for scheduled passenger aircraft serviced by Çelebi NAS during FY14 at the airport. Table 31: Comprehensive tariffs for ground handling of scheduled passenger aircraft Aircraft type Domestic (INR) International (INR) Pax terminal services Ramp handling Total Pax terminal services Ramp handling Total 3,800 3,200 4,500 19,100 38,100 8,900 7,600 12,700 38,100 63,500 12,700 10,800 17,200 57,200 1,01,600 11,000 23,500 30,400 35,600 55,000 33,000 69,900 1,23,000 1,44,700 1,97,000 44,000 93,400 1,53,400 1,80,300 2,52,000 Code B Code C Code D Code E Code F Source: CAPA Research, AERA Note: Ceiling rates are as per the concession agreement with Mumbai International Airport Pvt. Ltd., dated 14 November 2008. These rates are exclusive of government taxes and duties such as service tax and the concession fee payable to the airport operator. The approved FY13 tariffs for ground handling services provided by Cambata Aviation at the airport for scheduled passenger aircraft are provided below. Aircraft type A320 737 A330 A340 747 © 2014 CAPA India International (INR) 123,200 134,400 196,000 151,200 173,600 180 CAPA India Ground Handling Report 2014 INDIA
747‐200 747SP 767 777 A330‐600 209,440 173,600 176,400 154,000 173,600 Source: CAPA Research, AERA Note: Tariffs provided in the table are inclusive of royalties payable to the airport operator. Air India also provides ground handling services at Mumbai airport. It has submitted its tariff proposal to AERA and the proposed rates are provided in Table 32. In its proposal, Air India has proposed to retain existing tariffs for ground handling services for the entire control period. In addition, it has stated that in case of any revision it will approach AERA. As Air India has not proposed any increase in ground handling charges, AERA is currently considering this submission of AI for determination of tariffs for ground handling services provided by it at Mumbai airport. Table 32: Proposed tariffs for ground handling of scheduled passenger aircraft by Air India Aircraft type Transit A320/737 707/IL62/757 A330/A310/767/A330 747/A340/777 1,310 1,455 2,882 3,413 Turnaround within 4 Turnaround beyond hours 4 hours 1,799 1,999 3,914 4,665 2,008 2,231 4,432 5,279 Source: CAPA Research, AERA Note: Numbers are in USD. For conversion of USD into INR, RBI reference rate as on the first day of the month for the first fortnightly billing period and the rate prevailing as on sixteenth day of the month for the next fortnightly billing period shall be adopted. Airport levy and service tax will be charged additionally Time Iimit for use of equipment per flight is as follows: ‐2 hours for transit flights ‐2 hours 30 minutes for turnaround within 4 hours ‐3 hours for turnaround beyond 4 hours Flights handled between 0001 Hours and 0400 Hours will be charged a 15% peak‐hour surcharge. Handling in case of technical landing for other than commercial purpose will be charged 50% of the above rates, provided there is no physical change of load. Handling in case of return to ramp will not be charged extra, provided that a physical change of load is not involved. Handling in case of return to ramp involving a physical change of load will be charged as for handling in case of a technical landing No extra charge will be implemented for providing the services on Saturdays, Sundays, and public holidays. Chennai airport During FY14, the following three ground handling firms provided ground handling services at Chennai airport. 
Air India  Bhadra International India Ltd.  Cambata Aviation Pvt. Ltd. © 2014 CAPA India 181 CAPA India Ground Handling Report 2014 INDIA
Appendix E: Minimum and average wage rates of personnel employed in ground handling Minimum wage rates for ground handling staff across six metros (in USD) City Classification of Labour Skill Skilled Semi‐skilled Unskilled Delhi x.xx x.xx x.xx Mumbai x.xx x.xx x.xx Bengaluru x.xx x.xx x.xx Chennai x.xx x.xx x.xx Hyderabad x.xx x.xx x.xx Kolkata x.xx x.xx x.xx Source: CAPA Research, numbers are in USD/hour Average wage rates for ground handling staff across six metros (in USD) Role Bengaluru Chennai Delhi Hyderabad
Kolkata Mumbai Airside Cabin cleaning Supervisor Salary/month Salary/month Salary/month Salary/month Salary/month Salary/month xxx xxx xxx xxx xxx xxx Staff xxx xxx xxx xxx xxx xxx Ramp Supervisor xxx xxx xxx xxx xxx xxx Staff xxx xxx xxx xxx xxx xxx Bus Drivers xxx xxx xxx xxx xxx xxx Baggage drivers xxx xxx xxx xxx xxx xxx Jetway operator xxx xxx xxx xxx xxx xxx Marshals xxx xxx xxx xxx xxx xxx Terminal Gate agents Supervisor xxx xxx xxx xxx xxx xxx Staff xxx xxx xxx xxx xxx xxx Porter xxx xxx xxx xxx xxx xxx Source: CAPA Research, numbers are in USD/month and only include the cash component of salary (i.e. benefits are excluded) © 2014 CAPA India 193 CAPA India Ground Handling Report 2014 INDIA
Appendix J: Financial Analysis of ground/cargo handling firms at Kolkata airport Able Aviation India Pvt. Ltd. Balance sheet (Units in USD mn.) Y‐o‐Y Change Sources of funds Paid up capital Share application money (pending allotment) Reserves and surplus Secured Loans Unsecured Loans Deferred Tax Liabilities (Net) Total liabilities and equity Application of funds Gross fixed assets (including intangible assets) Less: depreciation and amortisation Net Fixed Assets Capital work‐in‐progress Investment Deferred tax assets (Net) Current assets, loans and advances (a) Inventories (b) Sundry Debtors (c)Cash and Bank Balances (d) Other current assets (e) Loans and Advances Less : Current Liabilities & provisions (a) Current Liabilities (b) Provisions Net Current Assets Misc expenditure to the extent not written off or adjusted Profit & Loss Account‐ Dr. Balance Total Assets FY10 0.185 0.000 0.023 0.013 0.000 0.000 0.221 0.000 0.220 0.066 0.153 0.000 0.000 0.000 0.000 0.000 0.239 0.007 0.000 0.021 0.000 0.201 0.000 0.068 0.000 FY09 0.185 0.000 0.017 0.018 0.000 0.000 0.220 0.000 0.201 0.038 0.163 0.000 0.000 0.000 0.000 0.000 0.209 0.027 0.000 0.010 0.000 0.189 0.000 0.056 0.001 FY08 0.019 0.000 0.006 0.028 0.076 0.000 0.128 0.000 0.111 0.009 0.102 0.000 0.000 0.000 0.000 0.000 0.069 0.005 0.000 0.003 0.000 0.052 0.000 0.026 0.001 FY10 0.0% 0.0% 37.5% ‐27.1% 0.7% 9.3% 75.8% ‐6.0% 14.6% ‐72.5% 121.2% 5.9% 20.6% ‐33.3% FY09 900.0% 0.0% 206.5% ‐37.1% 71.2% 80.7% 299.9% 60.4% 202.7% 398.5% 202.8% 266.9% 115.7% ‐25.0% 0.000 0.221 0.000 0.220 0.000 0.128 0.7% 71.2% Source: MCA filings, CAPA research Ratio Analysis FY10 FY09 FY08 Net Debt/Equity Ratio Current Ratio Quick Ratio Debt to Total Assets Ratio 2.7% 1.34 1.23 0.06 ‐4.4% 1.30 1.24 0.08 412.5% 1.50 1.44 0.81 © 2014 CAPA India 235 CAPA India Ground Handling Report 2014 INDIA
Appendix P: Ground support equipment with select designated ground handling firms at Indian airports Çelebi Delhi Ground Handling –Delhi Airport Ground Support Equipment Quantity Air Start Unit Air Conditioning Unit AmbuLift Baggage Trolley Container Dolly Conveyor Fork Lift Ground Power Unit Loader Pallet Dolly Push Back Roller Step Ladder Toilet Cart Tow Bar Tow Tractor Tractor Water Cart Total xx xx xx xx xx xx xx xx xx xx xx n/a xx xx xx n/a xx xx xxx Source: CAPA Research, AERA © 2014 CAPA India 250