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DAMODARAM SANJIVAYYA NATIONAL LAW UNIVERSITY

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VISAKHAPATNAM

SUBJECT

AIR AND SPACE LAW


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PROJECT TOPIC i

REGULATION OF GROUND HANDLING SERVICES IN INDIA


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TABLE OF CONTENTS:
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1. Meaning and Definition of Ground Handling.


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1.1 Self- Handling.


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1.2 Mutual Handling.


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2. Classification of Ground Handling Services.


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2.1 Ground Handling Service Providers.


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3. Regulation of Ground Handling Services.


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4. Regulation at Airports.
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5. Recommendations.
6. Conclusion.

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ABSTRACT

Ground handling is an essential service that is required by an aircraft operator before take-off and
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after landing. Due to security concerns at Indian airports, the Bureau of Civil Aviation Security
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(BCAS) issued a circular making it mandatory for all ground handling service providers to undergo
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security clearance and background checks of its employees before issuing the airport entry pass.
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Subsequent to this rule, the Directorate General of Civil Aviation (DGCA) in India issued a new
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ground handling regulation in 2007 that restricted the number of service providers as well as self-
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handling by aircraft operators (excluding the national airline) at six major airports in India. The
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private aircraft operators filed a suit against the government. This case is being heard in the
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Supreme Court of India at the time of writing this paper. The main purpose of this research is to
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identify ways to modify the existing regulation by establishing a fair, non-discriminatory ground
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handling regulation that is beneficial to all the major stakeholders in the Indian aviation industry,
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without compromising on safety, security and space constraints at airports. This research identified
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the main issues of the existing ground handling regulation in India and comparisons were made
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primarily with the European Council Directive that was issued in 1996. The International Civil
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Aviation Organization (ICAO) standard and recommended practices, along with other
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international practices, were compared with the Indian scenario. Security practices at airports,
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safety standards for ground handling, competition, and price quality regulation were also
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discussed. Recommendations were proposed to improve the current regulation based on literature
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review, integration of various opinions from professionals in ICAO, safety and security regulators
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in Australia, airlines, airports and ground handling companies in India and outside.
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CHAPTER-I

Meaning and Definition of Ground Handling:


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There is no international standard definition for ground handling. Ground handling service
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basically means the services required by an aircraft operator before take-off and after landing.
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According to ICAO, it refers to the “services necessary for an aircraft’s arrival at, and departure
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from, an airport”. IATA describes it as “an essential part of the overall product airlines offers to
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their passengers”. In the Indian context, ground handling means: ramp handling, traffic handling
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and any other activity specified by the Central Government.


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VARIOUS KINDS OF HANDLINGS: i i i

Self-Handling:

Self ground handling is a situation in which the airport user does not subcontract ground
handling activity to a third party, instead performs these functions by itself. In most cases,
airlines themselves do self ground handling for their flights. The Council of European Union
defines self handling in Article 2 of the Directive as “a situation in which an airport user directly
provides for himself one or more categories of ground handling services and concludes no
contract of any description with a third party for the provision of such services 1 for the purpose
of this definition, among themselves airport users shall not be deemed to be third parties where:

 One holds a majority holding in the other; or


 A single body has a majority holding in each”.

In the United Kingdom (UK), airports can have any number of self handlers and limitation is
provided only with the approval of the Civil Aviation Authority (CAA) with respect to security,
safety, space and available capacity (NEI, 2002).

Mutual Handling: i

When one airline does ground handling for another airline, it is called mutual handling. This type of
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ground handling is seen at US airports. Such contracts between airlines enable services on common
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1
Findlay, Christopher and David K. Round, (2006)- The „three pillars of stagnation‟: challenges for air transport
reform. World Trade Review, 5, pp 251-270.

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routes to be provided jointly and revenue to be shared. However, this method is gradually changing
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due to competition between airlines (WTO, 2007).


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CHAPTER-II

Classification of Ground Handling Services: i i i i

Ground handling can be generally classified as airport operations at the terminal building and at the
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airside. In the Indian scenario, the terminal building operations are called traffic handling and the
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activities at the airside are termed as ramp handling.


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The functions or services included in ground handling differs between countries and sometimes
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differ from airport to airport.


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Ground Handling Service Providers:

There is no specific international rule as to who should provide ground-handling services at an


airport. Generally, airport authorities, airlines or ground handling agents or a combination of
these three carry out ground handling at airports.

The GATS prepared by WTO also confirms the above fact that the majority of ground handling
services is provided by airlines themselves or by an airport operator or by specialist ground
handling organisations. Sometimes these services are carried out by a combination of these
entities (WTO, 2007).

ICAO: i

“During May 1997, ICAO approved the recommendations developed by the Air Transport
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Regulation Panel (ATRP) for ground handling that contained model clauses on five “doing
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business” matters2. ICAO recommended that Member States could use the model clauses as
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guidance in creating bilateral or multilateral agreements for deciding the parties to be involved in
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the provision of ground handling services.”


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Model Clause on Ground Handling: i i i i i

Each Party shall authorize air carrier(s) of the other Party/Parties, at each carrier’s choice to:
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2
ACI 2000b. The Single Till. Conference on the economics of Airports and Air Navigation services. Montreal: ICAO.
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a) Perform its own ground handling services
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b) Handle another or other air carrier(s);


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c) Join with others in forming a service-providing entity; and/or d) Select among competing service
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providers.
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The air carriers are free to choose from various options available except in cases where there are
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constraints due to safety, security and space at airports. They also specify that in the case of these
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exceptions, the carriers that are restricted should be selected on the basis of objective, transparent
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and non-discriminatory procedures.


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United States of America: i i i i

In USA, usually the aircraft operators or airlines perform these services. If an airline has an interline
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agreement with another, then ground handling equipment and services may be shared between
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these airlines also. In other cases, specialist companies that have an expertise in ground handling
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carry out this function, either by themselves or in collaboration with the aircraft operator.
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United Kingdom: i

In UK, the CAA has established certain regulations on who can perform ground handling service at
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airports. It can be performed by the following parties:


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 Any airport user, including an airline, can do ground handling by itself (self handling) and
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i the airport operator cannot restrict the number of self handlers unless they justify that it may
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i be due to safety, security or space constraints.


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 The airport operator could have an agreement with a third party for such services provided
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i these service providers are not directly or indirectly controlled by any of the following:
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1. The managing body of the airport, or i i i i i i

2. An airport user who carries more than 25% of passenger or freight, or


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3. Anyone who is directly or indirectly controlled by the managing body of an airport or any
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i airport user. i

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Australia: i

In Australia, there is no specific regulation as to who may be allowed to perform ground-handling


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services. “The main service providers for airlines at the airports are companies that specialise in the
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ground handling function and they conduct this activity under safety standards set by Civil
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Aviation Safety Authority (CASA).” There are about 16 ground handling companies in Australia.
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Qantas, the national carrier of Australia, provides this service for its own aircrafts as well as for
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other airline operators3. Some of the main ground-handling companies in Australia are Menzies
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Aviation, Toll Data, Aero-Care and the Ground Handling Division of Qantas.
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India: i

Prior to the regulation issued in 2007, practically anyone could perform ground handling in India as
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long as they complied with certain conditions. The first ground handling regulation came into
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effect in the year 2000 where the Airport Authority of India (AAI) allowed an aircraft operator to
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either carry out their own ground handling services at an airport or utilise the services of any of the
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following:
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 Airports Authority of India (AAI) i i i i

 The two national carriers of India (Air India & Indian Airlines)
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 Any ground handling company licensed by AAI


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During this period, Air India and Indian Airlines controlled the majority of the ground handling
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services in India. Privately owned companies like Cambata Aviation could only have 20-25%
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market access. Subsequently, the government opened the market for foreign direct investment up to
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74% which saw the entry of many new ground handling companies (WTO, 2006).
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In 2007, the Directorate General of Civil Aviation (DGCA) issued a new regulation stating that
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ground handling at six airports (Delhi, Mumbai, Chennai, Kolkata, Bangalore and Hyderabad)
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could only be performed by one of the following three entities:


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 The airport operator by itself or its joint venture partner


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3
Paulus, Nilanthi Cassia, (2011) – Ground Handling Regulation in India-A comparison with international policies
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and practices‟, School of Aerospace, Mechanical and Manufacturing Engineering, RMIT University, Australia
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 Subsidiary companies of the national carrier AI (National Aviation Company of India i i i i i i i i i i i

i Ltd (NACIL) or their joint venture partners which specialise in ground handling services)
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 Any ground handling service provider selected through a competitive bidding process on
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i the basis of sharing revenue with the airport operator and which has attained security
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i clearance from the Government. i i i

At all other airports, airline operators except for foreign airlines are allowed to self-handle, in
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addition to the above three entities.


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“It should be noted that the above mentioned six metropolitan cities account for more than 70% of
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air traffic in India. During the 2008-09 period, out of a total of 108.88 million passenger
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movements, these six airports accounted for 78.69 million passenger movements. For this reason,
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Government policy on ground handling at these six major airports as well as other airports in India
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is of utmost significance to all airlines operating in India4.”


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REGULATION: i

Regulation is considered as a term that is sometimes difficult to be defined. It has different


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meanings to different people depending on where they come from. For some it may be a restrictive
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force that governments use to constrain liberties of certain people. For others, it serves the interests
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of the dominant class and sets power in a civilised form. Some people consider regulation to be that
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which is done only by the government. Therefore by understanding the multiplicity of meaning,
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suggesting that “regulation is the promulgation of prescriptive rules as well as the monitoring and
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enforcement of these rules by social, business, and political actors on other social, business, and
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political actors”. The main purpose of regulation in a society is to attain optimum outcomes so that
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even if the market system fails, the regulations in place will protect the society from any downfalls.
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The aim of regulation is linked to an economic theory called General Equilibrium Theory. This
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theory highlights the need for regulation in a society, which is to solve a particular situation if the
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market system fails and to deal with the developmental factors of a country if it is still in the infant
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stages of growth and development.”


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4
AAI 2007. Airports Authority of India (General Management, Entry for Ground Handling Services) Regulations,
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2007. New Delhi: AAI.


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Civil Aviation Industry:
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The convention of International Civil Aviation in 1944 (Chicago Convention) marked a


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significant event in the history of civil aviation where 52 States signed an agreement to co-operate
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in the civil aviation sector and decided to have uniformity in regulation and standards, procedures
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and organisation regarding civil aviation matters. As a consequence of this convention, ICAO was
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formed during 1947. One of the main activities of ICAO is standardisation of practices and
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procedures of matters related to aviation. This is achieved by the establishment of International


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Standards and Recommended Practices published by ICAO.


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Member States are obliged to respect and follow these Standards and Recommended Practices
but there is no mechanism to enforce compliance by Member States. If any of the 190
Contracting States is not able to follow the standards or if they follow in a different form, it is
required by them to notify these differences with ICAO, which are then circulated to all Member
States. However ICAO does not have the mandate to enforce the implementations. On the basis
of the Chicago Convention and subsequent developments in the civil aviation sector, many
international bodies and regulations were established from time to time in different countries. As
the scope of this paper is limited to ground handling services and their regulation, the subsequent
section gives a brief overview of the current ground handling regulation in USA 5, Europe,
Australia and India.

5
ENAC 2008. Handling Liberalization and regulation. Conference on the economics of airports and navigation
services. Montreal: International Civil Aviation Organization.

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CHAPTER-III

REGULATION OF GROUND HANDLING SERVICES i i i i

Purpose:

As discussed previously, one of the main purposes of regulation is to overcome market failures.
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Some of the market failures that may be prevalent in a society could be due to monopoly and
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informational asymmetries. Most airports are considered as natural monopolies due to their market
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power. Therefore ground handling service providers tend to follow the same characteristics of
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monopoly at airports in some countries. During the late 1990s, at some of the European airports,
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ground handling service related to passenger check-in and baggage handling was a monopoly.
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After understanding the significance of ground handling at airports, ICAO addressed various
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ground handling regulatory issues at its Montreal Conference in the year 2000. also states that the
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need for regulation in the civil aviation market may be attributed to safety, security and for the
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protection of the environment. He argues that most service providers generally know more than the
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ultimate consumers6. This information asymmetry could cause market failures. Therefore certain
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standards and regulations should be established and monitored by audits and review. This aspect is
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also important for ground handling services because any failure in this essential function at airports
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could have harmful effects in the aviation sector.”


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Current Regulatory Framework: i i i

As ground handling activities are services performed at airports (that are generally considered a
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monopoly) and have an impact on the safety and security of civil aviation operations, a degree of
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regulation is important for ground handling functions as these are vital services offered for all
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airlines. There were no international regulations for ground handling until the late 1990’s. They
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varied from country to country. However, bilateral air service agreements contained some limited
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rules regarding this aspect. In 1996, the European Union (EU) promoted competition on a regional
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level by liberalising the existing rules on ground handling services. The ICAO does not have
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material by which a country can base regulations for ground handlers. It basically differs between
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countries. Some of the recommendations regarding ground-handling rules are found in its Airport
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Economics Manual
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6
WTO Paper (2005), “Air Transport Services”, Information Note by the Secretariat, Council for Trade In Services,
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Job (05)/300 dated Nov. 2005


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The General Agreement of Trade in Services (GATS) prepared by World Trade Organisation
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(WTO) governs air transport services within a specific annex called Annex on Air Transport
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Services7. Currently this Annex is under its second review that commenced in September 2005
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(WTO, 2011). A special working group of IATA called IATA Ground Handling Council (IGHC)
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consists of ground handling service providers who have an opportunity to participate in setting
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standards for ground handling. They have a couple of working groups who are currently
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developing policies and recommendations on certain ground handling topics. IATA’s Airport
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Handling Manual was also prepared by IGHC (IATA, 2011). Besides the above international
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organisations, each country has its own rules and regulations that govern ground handling
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activities. In most of the countries there are no separate regulation related to ground handling
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services, as these are part of other regulations related to airports or within the bilateral service
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agreements. The European Union (EU) Council has a specific regulation called the Council
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Directive 96/67/EC (Directive) which governs all ground handling policies at Community airports
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of the European Union. On the basis of this Directive, the UK Civil Aviation Authority (CAA)
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introduced the Airports (Ground Handling) Regulations 1997, which is the regulatory framework
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of ground handling for all airports in the UK (Jackson, 1997)8. In The Bahamas, the Civil Aviation
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Department has an Advisory Circular (AC-12-006) for ‘Acceptable Ground Handling


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Arrangements’ as a regulation for Air Operator Certificate (AOC) holders as well as their ground
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handling service providers (CAD, 2008). In Jordan, Ground Handling Services (Part 140) is under
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its civil aviation law. In Lebanon, Ground Handling Regulation is a subpart (Part III – Subpart 310)
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of the Lebanese Aviation Regulation (DGCAL, 2005). In India, the first ground handling
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regulation came into effect during the year 2000, and in September 2007 the Director General of
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Civil Aviation issued another regulation that covers the rules for granting permission for ground
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handling services at airports other than those belonging to Airports Authority of India (AAI).
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Subsequently in October 2007, the AAI published in the official gazette the Airports Authority of
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India (General Management Entry for Ground Handling Services) Regulations, 2007 (AAI, 2007).
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7
F. Gomez, D. Scholz, (2009)- “Improvements to Ground Handling Operations and their benefits to Direct Operating
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Costs”, Hamburg University of Applied Sciences, Deutscher Luft- und Raumfahrt kongress 2009, DocumentID:
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121197
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“Ground Handling at the Airports”, presented by the ICAO secretariat at the Conference on the Economics of
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Airports and Air Navigation Services, Montreal, 19-28th June 2000- ANS Conf-wp/10.
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As ground-handling services are one of the main functions carried at an airport, it is important to
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understand various regulatory mechanisms that operate within the airport environment. The
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subsequent section gives an overview of airport regulations and various economic regulations
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practiced at airports.
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CHAPTER-IV

REGULATIONS AT AIRPORTS i i

Airports Council International (ACI) believes that regulation is required for airports in certain cases
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where an airport would have a high degree of market power, where there is evidence that airports
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will take advantage of their market power if not regulated and where the airport users are not
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protected by other general legislation. A country needs to explore the pros and cons of regulation
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before imposing it, as regulation imposes costs, bureaucracy, and inflexibility and restricts
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creativity. Argues that airport regulation is based on the best ways that countries use to pursue
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efficiency objectives and non-efficiency objectives. According to him, regulations are based on
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different motives of the governments of different countries. Some of the possible reasons for
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regulating airports could be for maximising revenue on privatisation, promoting and protecting
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airline competition, disciplining pricing behaviour in an economy or to protect current/former


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national carriers. Countries around the world use different forms of economic regulation for
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airports as they are considered as natural monopolies. One important classification would be based
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on single till, dual till or shared till (hybrid) approach (IATA, 2006). In order to better understand
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the role of economic regulation of a country on ground handling, it is important to know the
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difference between aeronautical and non-aeronautical activity which are the main sources of
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revenue at an airport, and also various price mechanisms used at airports9.”


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An airport generally has two main sources of revenue. One is from aeronautical facilities and the
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other from non-aeronautical and commercial activities (ACI, 2000b). Aeronautical revenue
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comprises of revenue from air traffic operations such as landing charges, passenger service
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charges, parking and hangar charges, cargo charges, security charges, noise related charges and any
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other charge for air traffic operations. Non-aeronautical revenue includes income from duty free
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9
GOHAIN, K. 2007. Grant of permission for providing ground handling services at airports other than those
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belonging to the Airports Authority of India. In: DIRECTORATE GENERAL OF CIVIL AVIATION (ed.) AIC
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7/2007. New Delhi: Aeronautical Information Services.


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shops, restaurants, bars and cafes operating within the airport premises10. It also includes revenue
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from rentals, automobile parking, revenue from commercial activities operated at airports and
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aviation fuel and oil concessionaries (ICAO, 2006).


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Ground Handling Regulation in India – 2007:i i i i i i i

The main catalyst for introducing the ground handling policy in 2007 was due to national security
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concerns. The immediate step to solve this problem was to restrict the number of people entering
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the sensitive areas of airport, especially the airside. In order to achieve this the BCAS made security
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clearance and background checks of all airport employees very strict. Outsourcing was also
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banned. Subsequently, the DGCA decided to restrict the number of ground handlers, especially at 6
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major airports in India that would ultimately reduce the number of people doing the same work.
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Although the reason for introducing the new policy was genuine, the steps taken to achieve this end
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were not completely fair to all the stakeholders. The following section shows the advantages some
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stakeholders had over others. It should also be noted that this regulation has many similarities with
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the European Council’s Ground Handling Directive published during 1996 for all its Community
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airports.
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“Ground handling at the Airports”, presented by the ICAO secretariat at the Conference on the Economics of
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Airports and Air Navigation Services, Montreal, 19-28th June 2000- ANS Conf-wp/10.
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CHAPTER-V

General Agreement on Trade in Services (GATS): i i i i i i

The GATS of the World Trade Organization came into effect during 1995 to provide certain
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principles and rules for a multilateral framework for trade in services. It is important to note some
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of the main features of GATS. Firstly, GATS aim at the progressive removal of barriers to trade in
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service. Secondly, it aims to cover all tradable services in all sectors. Thirdly, the benefit of the
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country is balanced with all the goods and services offered and not just one particular sector (IATA,
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1999). The literature review as part of this project revealed that ground handling services was
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included in GATS in its first Air Transport publication (WTO, 2006)11. As per GATS, ground
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handling services is directly related to airline operation. Not many officials in the aviation industry
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are aware of this agreement. But considering the fact that there are quite a number of international
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ground-handling companies operating in India, the impact of GATS might be limited.


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In the Middle East, the airport operator considers ground-handling services as a monopoly activity
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of the airports. However, the service quality offered is considered top class (Itz, 2011). This
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agreement might be of influence in such regions. However, there is no data to confirm it. Future
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research could be done on the impact of the inclusion of ground handling services in GATS in
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different countries.
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Recommendations:

From the above data and discussion of various aspects of the issues in new ground handling
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regulation in India, the following are the recommendations made to achieve the main objective of
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the project that is to identify ways to modify the existing regulation by establishing a fair, non-
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discriminatory ground handling regulation that is beneficial to all the major stakeholders in the i i i i i i i i i i i i i

Indian aviation industry, without compromising on safety, security and space constraints at
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airports.
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1. An effective fool proof security system must be implemented at all airports in the country
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including the implementation of AEC program by the BCAS. The security system needs to be
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monitored from time to time and updates of technology must be made from time to time.
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11
WTO (July 2006), “Air Transport and the GATS- 2000-2005” in Review – S/C/W/270, pgs 71-72.
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2. DGCA must implement safety standards pertaining to ground handling regulation including the
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criteria for safety clearance of all ground handling entities. Once the standards are set, the
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performance of the standards must be audited at regular intervals.


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3. The safety and security regulators of India (DGCA & BCAS) must come to a combined
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conclusion on which entities would be accountable and responsible for the different activities of
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ground handling at airports.


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4. AERA must take its final stand on its economic regulation of airports and air navigation services
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so as to regulate the prices of ground handling services (aeronautical activity) in India


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5. AERA must either set its own quality standards for various ground handling services or monitor
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the performance of the quality standards set by the airport operators in the country (if that complies
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with international standards).


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6. The proposed autonomous Civil Aviation Authority must be established at the earliest to
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coordinate between the regulators. This autonomous body must be completely separate from the
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influence of Indian politics and should implement the instructions as received from international
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organisations such as ICAO and IATA as applicable to the aviation industry in the country.
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7. Airline operators must be allowed to choose from several different options of ground handling
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service providers including self-handling as per the recommendations given by ICAO. If, in any
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reasonable case, limitation to self-handling is imposed at the airports, it must be based on relevant,
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transparent and non-discriminatory factors.


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These recommendations are by no means exhaustive. It is only the result of the research conducted
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during the short period of less than three months (duration of the course work). Further research
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might help to refine these recommendations that could be considered for the Indian scenario.
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CONCLUSION

The main issue of ground handling regulation issued in India during 2007 was with regard to
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security concerns within the country. In order to safeguard national security, the Government of
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India decided to restrict the number of ground handling service providers at 6 major airports in the
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country. Self-handling was also restricted at these airports. This decision by the Government
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created divided opinions in the aviation industry in India. A study on this problem revealed that the
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ground handling regulation in India (issued during 2007) is similar to that of Europe Council
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Directive 96/67/EC issued on 15th October 1996 on access to the ground handling market at
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Community airports. However, not all the aspects of this Directive were used while establishing the
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regulation in India.
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“Interviews and the literature review revealed that the European Ground Handling Directive is also
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not a perfect model to follow as it has certain issues, which are currently under review by the
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European Council. India, being a growing aviation market, requires a certain level of ground
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handling regulation for effective and efficient ground handling operation. The regulatory
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authorities must be free from all political and other hidden agendas so as to ensure safe and secure
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civil aviation operations. Preference must be given to aircraft operators in choosing from several
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different choices of ground handling services including that of self-handling as per the ICAO
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recommendation, as aircraft operators are the primary recipient of this service. Limitations, if any,
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must be on relevant, transparent and non-discriminatory bases.


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