Airlines face tug trouble as AAI set to lift subsidy

Published: 05th July 2013 07:50 AM  |   Last Updated: 05th July 2013 07:57 AM   |  A+A-


Getting people’s bags out of the basement of the airport terminal and into the aircraft will be considerably dearer for domestic airlines and so don’t be surprised if they frown every time you hand them a bag to check in.

After all domestic flights shifted into the new airport terminal on April 15, airlines was forced to utilise the electric tugs provided by Bhadra International, a ground handling service provider. As the slope of the ramp from the luggage basement to the tarmac was too steep for most of the airlines' old tractors, AAI insisted that they use Bhadra’s electric tugs till they buy their own.

Now that the 3-month royalty waiver that AAI extended to airlines using Bhadra’s services ends on July 15, AAI’s top brass has said that the waiver of 32.5 per cent royalty will be lifted and the entire amount will be payable to them. “As per the agreement with the Airlines Operating Committee, the waiver was for three months and this has been honoured. Full payment will be levied after that,” said Airport Director H S Suresh.

This has caught the airlines unawares as practically none of them have had the budget to buy the uber-expensive electric luggage tugs.

“Despite the year being a relatively good, the industry still lost almost $1.65 billion in FY2013, with almost 40 per cent of the losses coming in the first three months of this year,” said a top official. Each of the tugs cost an airline `9,000 per day, with an airline usually employing between 4-6 tugs on a daily basis, depending on their traffic load. Once the waiver is lifted, they could end up paying as much as `5 lakh a month additionally, just to rent the tugs.

The airlines have asked Bhadra International for an extension in using their battery-powered tugs. Prem Bajaj, Chairman of Bhadra, said,“Airlines have asked us to extend the time as they have not bought the equipment. They are asking us to extend by three months to six months.” Sources said they may just approach AAI and ask if the waiver can be extended,“We never asked for the international-standard ramp. Now, they can help us till we purchase the machines,” said the airline official.

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