AI may review ground handling JV if SATS goes for stake sale

Air India (AI) may review its ground handling joint venture agreement with Singapore Air Terminal Services (SATS) if the latter diluted its stake to another firm in that country, sources said.

In that case, Air India would carry out ground handling activities through its own subsidiary, they said.

Maintaining that SATS was toying with the idea of participating in these activities in India with another Singaporean firm, the sources said Air India officials are understood to have recently informed a parliamentary committee about their stand if SATS decided to dilute its stake.

Air India-SATS JV firm with 50:50 equity ratio was set up on the basis of an agreement that does not provide for SATS joining hands with another firm, the sources said.

They said since the AI-SATS ground handling company started operations at the new Bangalore and Hyderabad airports, the revenue earned by Air India dipped drastically.

As per official figures, AI's revenue from Bangalore airport through third-party handling rose from Rs 34.90 crore in 2005-06 to Rs 51.99 crore in 2006-07 and Rs 53.69 crore in 2007-08 and then dipped to Rs 25.96 crore in 2008-09 when AI- SATS JV started operating.

Similarly at the new Hyderabad airport, AI revenues rose from Rs 50.91 crore in 2005-06 to Rs 61.19 crore in 2006-07 and then declined to Rs 39.13 crore in 2007-08 and merely Rs 12.45 crore in 2008-09.