VZCZCXRO8944
PP RUEHBI RUEHCI
DE RUEHC #2204/01 3522013
ZNR UUUUU ZZH
P R 172005Z DEC 08
FM SECSTATE WASHDC
TO RUEHNE/AMEMBASSY NEW DELHI PRIORITY 1835
INFO RUEHCG/AMCONSUL CHENNAI 8935
RUEHCI/AMCONSUL KOLKATA 3092
RUEHBI/AMCONSUL MUMBAI 1797
RULSDMK/TRANSPORTATION DEPT WASHINGTON DC 0664

UNCLAS SECTION 01 OF 03 STATE 132204 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: EAIR IN
SUBJECT: CIVAIR INDIA: GROUND HANDLING DEMARCHE 
 
REF: NOVEMBER-DECEMBER 2008 
     LIMAYE-DAVIS--HATLEY--ASHWORTH--SHAH EMAILS 
 
¶1.  This is an action message ) please see para 9. 
 
SUMMARY 
------- 
 
¶2.  Washington agencies have learned, through Post and media 
reporting, that the Government of India plans to implement a 
new ground handling policy at major metropolitan airports in 
India.  We understand the proposed Indian regulations would 
prohibit many air carriers, including those from the U.S., 
from performing their own ground-handling services, as well 
as limit the number of ground-handling agents allowed to 
provide services at those airports.  Washington agencies are 
concerned that the new regulations may be inconsistent with 
self-handling rights already accorded to U.S. carriers in our 
2005 Open Skies Air Transport Agreement.  The rules could 
also adversely affect ground handling arrangements U.S. 
carriers have with existing providers at certain airports. 
Washington agencies request Post immediately demarche the 
Indian government and request that any new regime incorporate 
and protect the rights of U.S. carriers under our agreement. 
End Summary. 
 
OBJECTIVES 
---------- 
 
¶3.  Department instructs Embassy to pursue the following 
objectives: 
 
-- Remind the Government of India that under our 2005 Air 
Transport Agreement, all U.S. carriers have the right to 
perform their own ground handling; 
 
-- Also remind the Government of India that the 2005 
Agreement requires that U.S. carriers be able to select among 
competing ground handling agents for handling services, and 
that this right and the self-handling right may only be 
subject to physical constraints resulting from considerations 
of airport safety; 
 
-- Request that the Indian government, in adopting any new 
rules on ground handling, do so in a manner that protects the 
rights guaranteed to U.S. airlines under our agreement. 
 
-- Ask the GOI for a copy of the proposed regulations on 
ground handling and ask when it intends to implement them. 
 
REPORTING DEADLINE AND POINT OF CONTACT 
--------- -------- --- ----- -- ------- 
 
¶4.  Embassy should report results of efforts by December 24 
to EEB/TRA/AN.  Post may also wish to e-mail the response to 
Viki Limaye-Davis at Limaye-DavisYV@state.gov, and Steven 
Hatley at Steven.Hatley@dot.gov. 
 
BACKGROUND 
---------- 
 
¶5.  A liberal provision on ground handling, an essential 
element of Open Skies, was one of the most contentious issues 
in the negotiation of our Open Skies Air Transport Agreement 
with India ("Agreement"), which entered into force on June 
21, 2005.  Under transitional terms in the Agreement, India 
committed to allow all U.S. carriers to perform their own 
ground handling no later than January 15, 2007.  Ground 
handling rights for U.S. carriers in India are governed by 
Article 8, paragraph 3 of the Agreement, which states that 
"(e)ach designated airline shall have the right to perform 
its own ground-handling in the territory of the other Party 
("self-handling") or, at its option, select among competing 
agents for such services in whole or in part.  The rights 
shall be subject only to physical constraints resulting from 
considerations of airport safety.  Where such considerations 
preclude self-handling, ground services shall be available on 
an equal basis to all airlines; charges shall be based on the 
costs of services provided; and such services shall be 
comparable to the kind and quality of services as if 
self-handling were possible." 
 
¶6.  Ground handling is the term used to describe a wide range 
of services that airlines require in order to service 
 
STATE 00132204  002 OF 003 
 
 
aircraft on the ground and handle movements of passengers, 
aircraft and cargo.  Passenger-handling includes check-in, 
boarding, staffing of customer service and ticket counters 
and lounges and general customer and flight information 
services.  Ramp-handling includes activities such as baggage 
handling, fueling, cleaning, catering, and pushback or 
towing, and cargo-handling includes loading and unloading 
cargo, storage and warehousing, customs handling and document 
control.  The right to self-handle does not, however, include 
the right for U.S. carriers to ground handle for other 
airlines. 
 
¶7.  (SBU) Several U.S. carriers have expressed concerns about 
the proposed rule, either because they already self-handle 
for some of their ground handling requirements in India or 
because the rule could impact handling arrangements with 
their existing service suppliers.  Self-handling rights can 
be particularly important for express delivery providers like 
FedEx and UPS, which have unique requirements based upon the 
time-sensitive nature of their cargo, money-back guarantees 
for late delivery, and the sophisticated, proprietary systems 
they employ for tracking and sorting packages.  FedEx 
self-handles in India and describes the ability to do so as a 
critical part of its business model.  Local FedEx reps have 
met with various Indian government agencies, including the 
Civil Aviation Authority, to make their concerns known, but 
have received no assurances that FedEx will be able to 
self-handle after the new rules come into effect.  While UPS 
does not currently self-handle in India, it would like the 
flexibility to do so in the future.  Delta Air Lines informed 
Washington agencies that while Air India provides its ramp 
handling in Mumbai, Delta self-handles "above-wing" passenger 
services through a joint venture, and not being allowed to 
continue doing so could mean handing over such operations to 
a company that will not provide Delta customers with the 
level of service they require.  Continental Airlines does not 
currently self-handle but has two concerns: first, the 
company wishes to retain the flexibility to self-handle for 
passenger services, and second, repeated delays in 
implementing new rules have made it difficult for the company 
to change providers at Delhi and Mumbai, due to uncertainty 
as to who will be allowed to handle at those airports. 
 
¶8.  Washington agencies raised concerns about changes in 
regulations on ground handling with Government of India 
officials during a May 2008 meeting in Washington with 
then-Secretary for Aviation, Ashok Chawla, Airports Authority 
of India Board Member P. Seth, DG of Civil Aviation R.P. 
Sahi, and Banashri Harrison from the Indian Embassy.  At the 
meeting, the Department of Transportation's Acting Assistant 
Secretary for Aviation and International Affairs, Michael 
Reynolds, asked for clarification of the proposed rules. 
Secretary Chawla indicated that the GOI was still mulling 
over options and considering requests from domestic airlines, 
but that it was likely self-handling would not be allowed by 
foreign airlines.  Reynolds told the Indians that, pursuant 
to the U.S.-India Open Skies agreement, U.S. carriers have 
the right to self-handle and that new regulations should give 
U.S. carriers the opportunity to take full advantage of their 
rights under that agreement. Reynolds indicated that the U.S. 
would likely seek further discussions on the topic as the 
GOI's decision making process neared completion.  While 
Washington agencies have yet to see the official regulations, 
a GOI circular (conveyed in Ref e-mails) indicates the GOI 
will institute the new regulations by January 1, 2009. 
 
ACTION REQUEST 
------ ------- 
 
¶9.  Washington agencies request that Post demarche GOI 
aviation authorities at the appropriate levels as soon as 
possible, drawing on the above information and the following 
talking points, which may be left as a non-paper, and inform 
them of our concern that the proposed ground handling rules 
appear inconsistent with the terms of our 2005 Open Skies Air 
Transport Agreement.  Washington agencies further request 
that Post ask the GOI for a full copy of the draft 
regulations and its timeline for their implementation, and 
urge the GOI to ensure that any new rules preserve the ground 
handling rights guaranteed to U.S. airlines under our Open 
Skies agreement. 
 
¶10. Begin talking points: 
 
-- The United States is concerned that proposed new 
regulations on ground handling at India's six metropolitan 
airports (Delhi, Mumbai, Chennai, Kolkata, Bangalore and 
Hyderabad), as well as greenfield airports under 
 
STATE 00132204  003 OF 003 
 
 
construction, would prohibit self-handling by foreign 
carriers. 
 
-- Under transitional terms in the 2005 United States ) 
India Air Transport Agreement ("Agreement"), India committed 
to allow all U.S. carriers to perform their own ground 
handling no later than January 15, 2007. 
 
-- Article 8, Paragraph 3 of that agreement states that 
"(e)ach designated airline shall have the right to perform 
its own ground handling in the territory of the other Party 
("self-handling") or, at its option, select among competing 
agents for such services in whole or in part. The rights 
shall be subject only to physical constraints resulting from 
considerations of airport safety..." 
 
-- Allowing carriers the freedom to self-handle is an 
important step toward creating a pro-competitive environment 
for international air services and is an essential element of 
Open Skies. 
 
-- The new regulations appear to be in violation of the 
rights of U.S. carriers under the Agreement. 
 
-- Some U.S. carriers are already providing some of their own 
ground handling services, at airports that would be subject 
to the proposed regulations.  For these carriers, a 
prohibition on self-handling would pose considerable 
disruption to their operations and could lead to job losses 
in India.  U.S. carriers that do not currently self-handle 
for their India operations must retain the flexibility to do 
so in the future. 
 
-- Of course, self-handling rights do not give U.S. carriers 
the right to perform ground handling services for other 
airlines. 
 
-- The United States Government raised its concerns on ground 
handling during a May 2008 meeting in Washington with 
then-Secretary for Aviation Ashok Chawla, Airports Authority 
of India Board Member P. Seth and DG of Civil Aviation R.P. 
Sahi.  At least one U.S. carrier has also raised its concerns 
with various agencies, including the Indian Civil Aviation 
Authority. 
 
-- However, neither the United States Government nor the 
affected U.S. carriers have received any indication that the 
Government of India will revise the proposed regulations to 
permit U.S. airlines to continue or, at their option, 
commence providing their own ground handling, should they 
wish to do so. 
 
-- The United States requests an update on the Government of 
India's timing for revision of current ground handling rules. 
 When do you anticipate implementation of the new rules? 
 
-- We also request details on what specific aspects of ground 
handling services will be affected.  Is it intended that the 
new rules will apply to both "above wing" services (i.e., all 
aspects of passenger handling) as well as "below wing" 
operations, including all aspects of cargo handling? 
 
-- United States Government agencies would also appreciate 
receiving a copy of the proposed regulations.  It is our 
intention to continue monitoring implementation of the new 
rules to ensure that U.S. carrier rights under the Agreement 
are protected. 
 
End talking points. 
 
¶11. Washington agencies appreciate Post's assistance. 
RICE