F.No.AERA/20011/DCSC/2010-11 Airports Economic Regulatory Authority ofIndia *-l:--lE--X--lE--lE-

Minutes of the Stakeholder Consultation Meeting held on 24.02.2011 at 1100hrs to elicit views / comments in respect of the proposal of Delhi Cargo Service Centre (DCSC) for approval of TSP charges, Handling and X-Ray machine usage charges circulated for stakeholder consultation vide Consultation Paper No. 12/2010-11 dated 05.01.2011

A meeting was held under the Chairmanship of Shri Yashwant S Bhave, Chairperson, in the Auditorium, % DIAL, New Udaan Bhawan, Near Terminal T3 , IGI Airport, New Delhi on 24.02.2011 at 1100 hrs with the stakeholders to elicit their views/ comments in respect of the proposal contained in the Authority's Consultation Paper No. 12/2010-11 dated 05.01.2011. The list of participants is enclosed. 2. Chairperson welcomed the participants and stated that the Authority has received several written responses to the Consultation Paper. It is, prima facie, observed that several users have strong views in the matter. Therefore, the Authority has convened this meeting so as to understand the issues in greater detail. Thereafter, Chairperson invited Shri Tushaar J ani, Chairman, DCSCto present his proposal 3. Shri Tushaar Jani brought out there has been a tremendous development in cargo in the recent past and that the country's economic growth @ more than 8.5% required better treatment of the needs the domestic cargo industry. Understanding the challenges required for providing a better environment for the domestic cargo at the IGI Airport, Cargo Service Centre participated in the bidding process initiated by DIAL for a common user domestic cargo terminal (CUDCT). He stated that: (i) There have been regular meetings attended by the cargo agents/airlines and complaints/problems looked into and resolved. (ii) Issues are being resolved on a day to day basis through continuous monitoring. (iii) The cargo volumes have considerably improved ever since the CUDCT became operational (iv) Rates sought for approval and based on which the letter of Intent (LoI) have been signed, were arrived after a series of meeting and negotiations with the airlines and cargo agencies with facilitation by DIAL. (v) The returns on these rates were considerably lower (IRR of 5.2%) Assuring that the Greenfield terminal under construction would be ready for the customers in a short time, which will offer value added services, Shri Tushaar Jaani promised that DCSCshall ensure quality services and infrastructure to the Industry. 4. Shri Satyan Nair, APAO, agreed with the position in the Consultation Paper and stated that the tariffs proposed by DCSC have already gone through an extensive consultation process based on which the LoIs have been signed. Hence, sanctity of the consultation process should be maintained and honoured. 5. Shri P.S.Nair, CEO, Airport Sector, DIAL invited attention to the three key issues highlighted by FIA, in response to the Consultation Paper: (i) Airlines forced to sign the LoI's - He stated that this was not the case and no airline could be coerced to sign such agreements. As a responsible airport Page 1 of 5 operator, DIAL is committed to provide the best of services to passengers and Cargo facility users. By commissioning the T3 on time, it has been able to deliver a world class facility for passengers. As regards the Cargo services, DIAL is contractually required to appoint two cargo service providers. CELEBI is handling and operating the brownfield cargo terminal, servicing the international cargo operations and DCSC, which is undertaking the setting up and operation of the Greenfield Cargo Terminal, is servicing the domestic cargo operation from the CUDCTtill the new Greenfield Terminal is developed and commissioned by DCSC. He stated that eventually both the cargo terminals (i.e. Brownfield Cargo Terminal and the Greenfield Cargo Terminal) shall offer, undertake and service both domestic and international Cargo terminal services thereby bringing in the desired competition as mandated in OMDA. (ii) Quality of Service vs High Tariff - He stated that there were issues initially when the operations commenced. However, with regular meetings and follow up action these issues have been addressed. The operational issues are now taken up and resolved through meetings on a regular basis. He also stated that the rates now being sought for approval were arrived after a series of meeting and negotiations with the airlines and cargo agencies. (iii) Unreasonable Return - The equity IRR @ 5.2% as per the audited accounts of DCSC, by any yardstick is not unreasonable. 6. Shri Amit Bajaj, DACAAI indicated that there has been serious deficiency in services provided by DCSC, though an improvement has been noticed in the last one and a half months. He further stated that: (i) There have been constant complaints made by DACAAI to DCSC through mails and written communications regarding the lack of manpower, separate area for consolidating, room for the agents as is provided by other airports etc. (ii) The costs of the cargo agents have gone up, despite having a consolidated terminal, due to lack of services by DCSC. (iii) DCSCis also not taking any liability for damage caused during handling. (iv) Levy of charges in line with the rates prevailing at Bangalore and Hyderabad is unjustified since the infrastructure provided by DCSC is inferior to the services available at the airports of Bangalore and Hyderabad. Further, the domestic cargo volumes at Delhi are 5 and 7 times of the cargo at Bangalore and Hyderabad respectively. Hence, there is no justification for keeping the rentals at the same leve1. (v) Levy of TSP charges for incoming cargo is not fair as no processing is required in such cases. De-unitization is done by the airlines. Hence, it is a case of "double charging". (vi) In pre- CUDCT days, there were no separate charges for the end customer. The concept of having breakup of charges into TSP, unitisation, deunitisation, X-Ray etc is very confusing as there are too many accounting heads. DCSC is already charging deunitisation charges to the airline and hence another charge proves to be a double charge to the end customer, thereby increasing airfreight charges.

Page 2 of 5 (vii) As regards the financials of DCSC, the audited Balance sheet reveals that concession charges are 45% of the revenue for which no supporting agreements have been provided and hence should not be a cost to the end customer. (viii) A 30% drop in tonnage has been forecasted by DCSC from January with the opening of Celebi, whose opening date is still not declared. In fact, the tonnage has gone up. Therefore, the financials / proposal submitted by DCSC need to be revisited. Ox) No space is given to the agents for processing the cargo and hence no TSP charges should be paid unless the service is provided. (x) As regards the demurrage charges, earlier and wherever the airlines are still functioning, free period of 7 days are given whereas DCSC is only granting a free day of one day, which is not justified and a minimum of 3 days is required. (xi) He further stated that if Ready For Carriage (RFC) goods are being brought to the terminal, there is no justification for levying the TSP charges on outgoing cargo. Shri Bajaj also requested that if any new charges are to be approved, it should be from the date of the Order of the Authority, since the fresh proposal has been submitted by DCSC only now. Further, all charges should be on the Airway Bill and be one consolidated charge and not in cash. 7. Shri Sanjiv Sharma of Blue Dart and Shri H.L.Rikhye of Deccan Cargo and Express Logistics submitted that they are not direct stakeholders in DCSC and requested for separate infrastructure/facilities for expeditious handling of their express cargo at the airport. Further, the Authority should look at the airline viability and allow self handling. 8. Shri Chhettri, ErCI was of the view that the earlier infrastructure on the roadside was pathetic and the CUDCT set up by DCSC should continue. However, the quality of services should be improved in line with the stakeholders' expectation. 9. Shri Laxman Jotiba Kesarkar, GATI endorsed the views of DACAAI, with special emphasis on requirement for improvement of infrastructure, as at other airports. 10. Shri Ashoke Guha, Celebi and Shri Prashant Nimgade, Menzies Aviation (India) Pvt.Ltd stated that they are attending the meeting only. 11. Shri Ashwinee Samantaray, First Flight stated that their points have been covered by DACAAI. The infrastructure vis-a-vis the time for clearance compared to earlier days has not improved. 12. Shri Abdul Salam, FICCI stated that as per the communication from their members, the rates being charged by DCSC are at par with the rates charged by AAI at the other airports and hence can be accepted. 13. Shri Ashim Sanyal ,VOICE stated that their concern being, basically from the end consumers point of view, was that the freight charges, if ultimately passed on to them, should be commensurate with the facilities made available to them. 14. Shri Ujwal Dey, FIA stated that their written submission has already been submitted and requested that the representative of its member airlines would give their opimon. 15. Shri S. Hari, Indigo brought out that they were doing their own operations with their allotted warehouse prior to the establishment of the CUDCT. When the CUDCT was Page 3 of 5 established, the airlines had no option but to sign the LoI with DCSCsince DIAL denied them access to airside. The negotiated prices (as claimed by DCSC), are not commensurate with the service quality/infrastructure provided and hence not justified. Further, domestic cargo handling at Delhi is a monopoly of DCSC, presently, and the airlines were given 'no' option. The charges proposed by DCSC are exorbitantly high with no correlation to the standard of services / facility, which are very poor. There is absolutely no comparison with the facilities at Hyderabad and Bangalore airports. The increase in cargo volumes is not on account of better facilities but due to economic growth. 16. Shri V.K. Bhatia, stated that they have their own domestic cargo warehouse and compared to the earlier situation when the cargo was delivered on the roads, the single window clearance facility available now appears to be more convenient and secure. The commissioning of the new terminal would be a value add and should ensure drastic reduction in dwell time, minimum pilferages and single window clearances. He opined that levy of TSP charges is quite reasonable. 17. Shri Shakti Yadav, expressed that they have been forced to operate from CUDCT in November, 2010. They have not signed the LOI or any Service Level Agreements (SLA) with DCSC. They have been forced into acceptance of TSP on AWE. Further, there is a monopoly of DCSC and the airlines have no choice in the matter. 18. Shri Murali Ramachandran, endorsed the views of Jet Airways and Indigo. He emphasised that they were forced to move into the CUDCT terminal, subsequent to which their handling costs have gone up due to which the domestic movements in the shorter sectors have decreased since the TSP charges are high. 19. Shri Edmund Evans Jones, Spice Jet endorsed the views of other airlines and stated that delivery times, cut off times and costs have unreasonably increased. He stated that the focus on quality and satisfaction to end users has always been a mandate of the Ministry and AERA, but the same is lacking in the instant case. He was also of the view that allotment of independent warehouses to the airlines was the solution to the problem. 20. Shri Tejinderjit Singh Dang, Go Air requested for warehouse space to the airlines and permission to do their own handling. He felt that the airlines should be given a choice to avail the services of DCSCand not imposed on them. 21. Secretary, AERA, summarised the views of the stakeholders and stated that basically three key issues need to be addressed: (i) As per the views of airlines, the pre CUDCT system of self handling by airlines was better. Hence, DIAL/DCSC would need to justify the interim consolidated domestic cargo handling system. (ii) DIAL /DCSC will also have to address the concerns raised by the airlines regarding the interim facility being a monopoly / deficiency of services and that airlines are being coerced in to entering the LoI's. (iii) Factual issues projected by DACAAI like a justification of TSP charges, charges at par with Bangalore and Hyderabad whereas the facilities at Delhi being much inferior to the facilities at those airports also needed clarification from DCSC/DIAL. 22. Shri Pradeep Panicker, DIAL submitted that the interim facility was set up and cargo operations of airlines were moved to interim facility due to the directions/advise of the Ministry of Civil Aviation and the Delhi Police for clearing the area outside the steel gate since the ongoing facilities was creating a traffic congestion. Further, the approved Master Plan envisaged timelines for commissioning of various terminals/projects and

Page 4 of 5 DIAL needed to implement the same. Further, it is not feasible to allot individual warehouses as the airport operator has limitations in allotting space with airside/cityside access to all airlines. As regards TSP justification, he stated that the TSP is a charge for the services provided inside the terminal and hence justified. 23. Shri Tushar Jani, DCSC submitted that the lack offacilities is basically due to space shortage and would definitely not be an issue once the new terminal comes up. He stated that the TSP charge is definitely leviable, since various facilities such as cargo getting unloaded/loaded, X-rayed, unitised and so on are involved. He expressed his total commitment to improve the facilities and the procedures. 24. While concluding the deliberations, Chairperson, AERA referred to the Authority's experience in respect of the Guidelines issued for tariff determination of Cargo, Ground handling and Fuel Supply Services and stated that the Authority had immensely benefited from stakeholder feedback. The Authority would like to similarly take on board the stakeholder comments in the instant case also. He highlighted certain issues such as the quality of service as raised by airlines which needs to be measured and quantification is required. On the issue of unreasonable returns to DCSC, Chairperson requested FIA to indicate as to what, in their view, would be the return the service provider would earn. He also stated that the airlines have observed that if the volumes are high, then the rates should be low. DCSC should seriously re-examine their proposal in the light of the discussions. As regards the shifting of the operations to the interim Terminal, the Authority would like to peruse the relevant papers/decisions. He also stated that the problems brought out regarding the lack of manpower should be addressed by DCSC at the earliest. In this light, he requested the DCSC, DIAL and FIA to file necessary papers / documents to substantiate their views expressed by them in the meeting. The Authority would thereafter take a final view in the matter. 25. The meeting concluded with a vote of thanks.

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Page 5 of 5 Annexure

List ofParticipants:

Airports Economic Regulatory Authority ofIndia:

1. Shri Yashwant S. Bhave, Chairperson in Chair 2. Shri M.P. Vijayakumar, Member 3. Shri Sandeep Prakash, Secretary 4. Shri C.V. Deepak, OSD-II 5. Mrs. Radhika R., DGM 6. Shri A.B. Saxena, AGM

Delhi Cargo Service Centre (DCSC):

7. Shri Tushar Jani, Chairman 8. Shri Radharamanan Panicker, CEO 9. Air Marshal S.S. Ramdas (Retd.), Director 10. Shri S. Subramanian, Chief Operating Officer

Delhi International Airport Pvt. Ltd.

11. Shri P.S. Nair, CEO - Airport Sector 12. Shri Pradeep Panicker, Chief Commercial Officer (Aero)

Air India Ltd. :

13. Shri V.KBhatia, Chief Manager (C)

Jet Airways / Jetlite (India) Ltd. :

14. Shri Shakti Yadav, Area Manager-Cargo 15. Shri Ranjeet Rana, Assistant Manager-Cargo Operations

InterGlobe Aviation Limited (IndiGo) :

16. Shri Mahesh Malik, VP - Cargo Sales & Services 17. Shri S.Hari, General Manager - Cargo 18. Shri Piyush Gupta, Senior Legal Counsel

Go Airlines:

19. Shri Tejinderjit Singh Dang, Managing Director zo.Shri KD.Singh CEO 21. Shri Amrik Singh, GM - Cargo

Page 1 of 3 Kingfisher Airlines:

22.Shri Murali Ramachandaran, Sr. V.P. - Ground Services

Spicejet Airlines Ltd.

23. Shri Edmund Evans Jones, Sr General Manager - Cargo

Association of Private Airport Operators (APAO) :

24. Dr. K.V. Damodharan, Advisor - Regulatory Affairs 25. Shri Satyan Nayar, Secretary General

Federation ofIndian Chambers ofCommerce and Industry (FICCO:

26. Shri Abdul Salam, Senior Assistant Director

Federation ofIndian Airlines (FIA) :

27. Shri Ujjawal Dey

Deccan Cargo & Express Logistics Pvt. Ltd. :

28. Shri H.L.Rikhye, CEO

Blue Dart Aviation Ltd.:

29. Shri Arun Ahlawat, Sr. Manager - Corporate Affairs and Policy 30. Shri Sanjiv Sharma

Domestic Air Cargo Agents Association (DACAAI):

31. Shri Suraj Agrawal, General Secretary 32. Shri Amit Bajaj, Executive Committee Member

Voluntary Organization in Interest ofConsuluer Education (VOICE):

33. Shri Ashim Sanyal, Chief Operating Officer

Express Industries Council ofIndia: 34. Shri P S Chhettri

Page 2 af3 CELEBI Delhi Cargo Terminal Management India Pvt. Ltd.:

35. Shri Ashoke Guha, Head-Finance & Accounts 36. Shri Manoj Sharma, Associate Head of Sales and Marketing

Menzies Aviation (India) Pvt.Ltd.:

37. Shri Prashant Nimgade, VP - Finance

GATI Ltd.

38. Shri Laxman Jotiba Kesarkar, Manager - ATe

First Flight Couriers Ltd.:

39. Shri Aswinee Samantaray, Asst. GM 40.Shri P.K.Singh, Dy.Manager

International Air Courier Division

41. Shri Rajiv Goswami, Director

Domestic Air & Train Cargo Agents

42. Shri Amit Bajaj, Director

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