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A Meeting Was Held Under the Chairmanship of Shri Yashwant S Bhave, Chairperson, in the Auditorium, % DIAL, New Udaan Bhawan, Ne

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A Meeting Was Held Under the Chairmanship of Shri Yashwant S Bhave, Chairperson, in the Auditorium, % DIAL, New Udaan Bhawan, Ne 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.
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