CHAPTER 1
MINISTRY OF CIVIL AVIATION

Airports Authority of India

1.1    Revenue Management

The Airports Authority of India (Authority) came into existence on 1 April 1995 as a result of the merger of the International Airports Authority of India (IAAI) with the National Airports Authority (NAA) with a view to accelerate the integrated development, expansion and modernisation of the operational, terminal and cargo facilities at the airports in the country conforming to international standards. The Authority is presently the owner of 95 airports spread all over the country. The Authority is also operating 28 Civil Enclaves at Defence airfields. The Management of 5 international airports at New Delhi, Mumbai, Kolkata, Chennai and Thiruvananthapuram lies with the International Airports Division (IAD), whereas the National Airports Division (NAD) manages 7 international airports at Amritsar, Ahmedabad, Bangalore, Cochin, Goa, Guwahati and Hyderabad, apart from domestic airports.

The revenue sources of the Authority can be broadly classified into the following categories:

1. Traffic revenue, which is received from Route Navigational Facilities Charges (RNFC), Terminal Navigational Landing Charges (TNLC), Landing, Parking and Housing Charges (LPH) etc.
2. Non traffic revenue, which comprises Passenger Service Fee (PSF), Foreign Travel Tax, public admission fee, trading concessions, rent received for the use of land, space, hangars etc. and revenue received from the grant of exclusive advertisement rights, car parking contracts, restaurants etc.
3. Cargo revenue, which is earned as a result of handling of cargo.

The table below indicates the quantum of revenue accounted for, in respect of all the categories, during the last three years:

1.1.2    Organisational structure

The Authority is headed by a Chairman who is assisted by four members, holding the charges of Planning and Engineering, Finance, Personnel and Administration and Operations apart from one Chief Vigilance Officer and one Executive Director (Consultancy). The Members are assisted by Executive Directors and General Managers who carry out the various activities of the Authority.

Member (Finance) is the Head of the Finance and Accounts Wing of the Authority and is assisted by Executive Director (Key Infrastructural Division), Executive Director (Finance and Accounts) and Executive Director (Internal Audit).

NAD has 6 Regional Accounting Units (RAUs) in addition to one headquarters unit. Similarly, IAD has 11 Accounting Units besides one headquarters unit. The Accounting Units of NAD and IAD are headed by Regional Executive Directors (REDs) and Airport Directors respectively.

To provide facilities for safe and efficient operations of aircraft within the air space of the country, the Authority levies RNFC, TNLC, LPH and cargo related charges on aircraft handled at the airports. RNFC charges are also recovered from aircraft using communication and navigational facilities en route to other countries without landing in India. The fixation and revision of these charges for the last 5 years from 1995-96 to 1999-2000 was reviewed with a view to ascertain their correctness. The levy and collection of these charges for two months selected at random for the years 1997-98, 1998-99 and 1999-2000 in respect of airports and offices of IAD and NAD at Delhi, Mumbai, Kolkata and Chennai along with airports at Guwahati, Hyderabad and Bangalore were examined.

Besides, records/ files/ contracts related to the grant of licences for the operations of restaurants, shops, hotels, car parking, entry to airports, advertisement rights etc. for the years 1997-98 to 1999-2000 were also reviewed. Documents relating to leasing of land, hangars etc. were also examined. The results of the audit have been discussed in the succeeding paragraphs.

As per the rules framed by the Authority, the traffic bills against all scheduled airlines/State Government etc. with credit facilities are to be raised once in a fortnight. The bills for the period from 1st to 15th are to be raised before 25th of the same month and bills for the period 16th to end of the month are to be raised before 10th of the following month.

It was, however, noticed that the Authority had not been following this schedule strictly, leading to delays in raising of bills. The review of bills for selected months of IAD (Mumbai, Kolkata, Delhi and Chennai) revealed that there were delays ranging from 1 to 183 days. Similarly, in NAD (Delhi, Mumbai, Kolkata, Chennai, Hyderabad and Bangalore), the delays ranged between 1 to 223 days. These delays in raising bills resulted in loss of interest amounting to Rs.75.28 lakh (IAD: Rs.32.57 lakh and NAD: Rs.42.71 lakh)

The Management attributed (March 2001) the delays to the non-availability of proper addresses of the airlines and lack of manpower. They also stated that the Airport Directors/REDs had been instructed to cut short the delays in raising the bills.

1.1.4.2.1   The new international airport at Cochin was to be operated by Cochin International Airport Limited (CIAL), a joint venture company incorporated to run the airport. As per the MOU signed between CIAL and the Authority, all the aeronautical charges except RNFC were to accrue to CIAL. The airport became operative from June 1999. However, due to the desire of CIAL to amend the MOU, it was noticed that neither CIAL nor the Authority raised bills amounting to Rs.2.26 crore for the period from June 1999 to March 2000 on various parties for the services rendered at that airport. The Management, while confirming the facts (March 2001), did not advance any reason for not raising the bills amounting to Rs.2.26 crore.

1.1.4.2.2    Druk Air overflew Indian air space while going to Paro Airport at Bhutan from Kathmandu and vice versa. It was observed that while bills for RNFC (overflying) were being raised against Druk Airlines for flights going to Paro Airport, no bills were raised for the flights going to Kathmandu due to lack of proper communication from Paro Airport. This resulted in loss of Rs.56.14 lakh for the period from January 1996 to March 2000. The Management, while confirming (March 2001) the facts, informed that the bills would be raised for all the preceeding years against Druk Air.

1.1.4.2.3   It was noticed that the Eastern Region of the Authority did not raise bills amounting to Rs.50.98 lakh for the period from 1996 to 2000 for RNFC in respect of non-scheduled overflying aircraft belonging to foreign countries due to non-availability of certain vital information like names, addresses of operators and registration for identifying the type/series of aircraft. The Management, while confirming the facts, stated (March 2001) that bills amounting to Rs.37.12 lakh had been raised.

1.1.4.2.4    NAD, Chennai, could not deliver 54 bills amounting to Rs.26.34 lakh for the period from 1994-95 to 1999-2000 to various parties due to non-availability of their addresses. The Management while confirming the facts (March 2001) stated that assistance of embassies concerned was being taken to minimise the delay in raising and realising the bills.

1.1.4.2.5   The Authority had been charging RNFC at lesser rates for aircraft exceeding weight of 60,000 kg and overflying within a distance of 500 km. compared to those overflying beyond 500 km. This concession in the rates was withdrawn from 1 February 1996. It was, however, noticed that the Chennai Region of the Authority had charged normal rates instead of concessional rates for the period from January 1992 to February 1996 from Indian Airlines Limited (IAL) for aircraft overflying within 500 km. This resulted in excess billing of Rs.1.59 crore. It was also noticed that IAL had not been paying bills at the normal rates from February 1996 i.e. when the concessional rates for the aircraft overflying within 500 km. were withdrawn by the Authority. This resulted in the non-recovery of bills amounting to Rs.7.83 crore till March 2001. The Management stated (March 2001) that the difference resulting out of excess billing had been returned to IAL. They also stated that IAL was being persuaded to make the payment for the period when the concession was withdrawn. However, on verification it was found in Audit that the refund of Rs.1.59 crore to IAL and recovery of Rs.7.83 crore from IAL were pending as on June 2001.

For the prompt realisation of bills, it is necessary that bills must be despatched immediately to user airlines without any delay. Shortcomings noticed in the despatch of bills are discussed below:

1.1.4.3.1   The RNFC section of NAD, Palam is responsible for raising traffic bills (except those in respect of overflying) on the airlines using IGI airport, Delhi. It was noticed that the section did not maintain any despatch register till April 2000. Similarly, IAD Chennai had also not maintained any despatch register, with the result that the actual date of despatch/receipt of bills by the airlines having offices at various airports could not be ascertained in Audit. The Management, while admitting the lapse, stated (March 2001) that proper despatch records were being maintained from May 2000 onwards.

1.1.4.3.2   There were delays in despatch of bills at NAD Chennai, Guwahati and Kolkata upto 40 days, 22 days and 64 days respectively leading to loss of interest of Rs.21.15 lakh.

The Management stated (March 2001) that effective steps had been taken to ensure despatch of bills within the stipulated time.

As per the rules of the Authority, traffic bills raised for the first fortnight of the month are to be collected by the tenth day of the following month. The bills for the second fortnight are to be recovered by the twenty-fifth day of the following month. In cases of delay in collection, deterrent interest at the rate of 1.5 per cent per month is to be recovered.

A review of the system of revenue collection revealed the following:

1.1.4.4.1   Detailed examination of the months selected randomly during the last three years showed that there had been considerable delay in the recovery of the bills from various airlines. In NAD and IAD the delays were upto 1139 days and 1052 days respectively. This resulted in loss of interest amounting to Rs.5.95 crore.

The Management, while confirming the facts, stated (March 2001) that the delay in the collection of revenue was mainly in respect of the national carriers with whom the matter was being taken up constantly for settlement of the bills. They also stated that delays in respect of raising of overflying bills on foreign airlines were mainly due to non-availability of their addresses. They further stated that necessary instructions were being issued to the regions to collect revenue within the scheduled time.

To avoid any loss of interest, cheques received by the Authority from various parties are to be deposited in the banks without any loss of time. Cheques/demand drafts are collected either directly by the Regional Accounting Unit (RAU) or by the RNFC section at Palam airport. The receipt of these cheques/demand drafts is recorded in the RNFC section against the bills, after which the demand drafts/cheques received are sent to the RAU for collection. Cheques/demand drafts received at various airports are sent to the Regional Headquarters by post. These are received in the Despatch section and then handed over to the RAU for collection. A review of these sections revealed the following:

1. The dates of receipt of the cheques/demand drafts were not recorded in the receipts issued to the airlines; and
2. In IAD, Chennai, no records were maintained to show the dates of receipt of cheques from various airlines. As such, delays, if any, in depositing the collected amounts, could not be ascertained.

The Management while accepting some delays in depositing cheques stated (March 2001) that instructions were issued for prompt depositing of cheques/demand drafts. The requisite register was also being maintained.

Accurate and timely realisation of traffic dues is dependent on correct recording in aircraft movement records, prompt issue of bills, constant follow up and close monitoring of recovery. The rules laid down regarding security deposits and delays in executing payments should be strictly followed in order to safeguard the interest of the Authority.

Details of the lapses/irregularities observed on scrutiny of the transactions of the randomly selected months during the last three years were as follows:

1.1.4.5.1   The Guwahati Regional office was not being intimated the data related to aircraft movements at its outstations. As such, correctness of the bills raised by this office for aircraft movements at outstations could not be verified. The Management did not reply to this point.

1.1.4.5.2    NAD, Bangalore collects data regarding arrival, departure time, weight of aircraft etc. for all the aircraft landing at Bangalore Airport from Hindustan Aeronautics Limited (HAL), Bangalore since the Air Traffic Control (ATC) tower is maintained by HAL. On the basis of information collected from HAL, NAD, Bangalore raises bills for RNFC and TNLC charges against flight operators. It was observed that there were delays in raising the bills due to delayed collection of information from HAL as HAL made the information available after 10 to 15 days from the flight dates. The Management stated (March 2001) that the problem had now been overcome by improving the rapport with HAL.

1.1.4.5.3   As per the rules, the Authority was collecting 15 days' revenue towards RNFC, TNLC, LPH and PSF from the Air Taxi Operators as security deposit. However, similar security deposits were not being collected from international airlines, national carriers (Indian Airlines Limited, Air India Limited and Alliance Air) and aircraft of departments of Central/ State Governments. It was noticed that the security deposits obtained from Air Taxi Operators (ATOs) fell short of the amount recoverable in a number of cases. A few examples are given below:

The amount of security deposit to be collected, therefore, required upward revision.

1.1.4.5.3.1    The traffic revenue and cargo related charges constitute 70 to 75 per cent of the total revenue of the Authority (refer table given in para 1.1.1). A major part of this revenue is contributed by foreign airlines and national carriers (viz. Indian Airlines Limited and Air India Limited) from whom no security deposit was obtained. It was also noticed that these airlines constituted approximately 60 per cent of the total debtors. It was noticed that the Authority had been allowing them to operate on credit basis. Had the Authority taken security deposits from these airlines also in terms of rules stated in para 1.1.4.5.3 above, the outstandings from them could have been reduced.

The Management stated (March 2001) that their credit policy was under review.

1.1.5.1   As per the commercial manual applicable to international airports, the licencees have to make payments of licence fee by the tenth day of the respective month. It was, however, noticed that a similar manual applicable to domestic airports or a commercial manual applicable to both the divisions of the Authority to regulate payment of licence fee from the licencees had not been framed by the Authority. The Management stated (March 2001) that the manual was under finalisation. The fact remains that the Authority has so far failed to prepare a common manual applicable to the both the divisions of the Authority though the Authority was formed in April 1995.

A review of the bills raised by the Authority in this regard revealed the following:

There had been significant delays in the raising of bills on various licencees which resulted in the blockage of funds with consequent loss of interest amounting to Rs.2.80 crore during the last three years as per details given below:

1.1.5.2.1    IAD, Delhi failed to raise bills for telephone (72 cases) and electricity charges (73 cases) within the due dates, resulting in interest loss of Rs.36.76 lakh. The Management stated (March 2001) that these bills were raised regularly and the amounts collected. The reply is not tenable as the Authority had not been raising bills as and when the respective authorities had billed them.

1.1.5.2.2   Delays in communicating/fixing the rates of licence fee for the year concerned by IAD Kolkata resulted in delay of 57 days in 1997-98, 59 to 83 days in 1998-99 and 230 to 239 days in 1999-2000, leading to loss of interest amounting to Rs.13.66 lakh. The Management did not reply to this point.

1.1.5.2.3    The Guwahati Regional office delayed the raising of non-traffic bills from 3 to 12 months in 1997-98, 2 to 7 months in 1998-99 and 2 to 13 months in 1999-2000, resulting in loss of interest of Rs.28.61 lakh. The Management did not reply to this point.

1.1.5.2.4   The Authority did not raise bills for interest on delayed payment by Government departments/parties. This resulted in loss of interest of Rs.2.01 crore (March 2000) in respect of allotment of land at Mumbai airport. The Management stated (March 2001) that certain Government departments were occupying the space prior to the formation of the Authority, without any contract/agreement for licence fee charges. They further stated that these departments were not paying licence fee at revised rates. They also stated that in view of the fact that the issue of basic licence fee remained to be sorted out, no bills for interest were raised.

As per the policy of the Authority, non-traffic bills must be realised by the tenth day of the respective month. However, a review of the bills in respect of Delhi, Kolkata, Mumbai and Guwahati airports for the last three years revealed that there were delays upto 1080 days in realising non-traffic bills, resulting in blockage of substantial funds of the Authority with a consequential loss of interest of Rs.17.50 crore till 31 March 2000.

The Management stated (March 2001 ) that the delays in realisation of revenue were mainly from Indian Airlines Limited and Air India Limited due to their financial constraints. The Management also promised to look into the delays in the realisation of dues and avoid them in future.

In order to secure its commercial interests, the Authority is required to enter into agreements with various parties to whom lease rights for land and space, advertisement rights and other concessions are granted by it. The terms of payments are, to be regulated as per the agreed terms of the agreements. However, it was noticed that the Authority did not enter into any agreement with the Central/State Government departments.

A review of the records revealed that a large quantum of revenue of the Authority remained unrealised from various parties as on 31 March 2000 as per details given below:

The main reasons for these outstandings were (i) non-execution/non-renewal of agreements, (ii) unilateral increase in rental charges, (iii) raising of bills in contravention of agreements, as discussed in the succeeding paragraphs. The Management did not offer any comments to the Audit observations except paragraphs 1.1.5.4.5, 1.1.5.4.10, 1.1.5.4.13, 1.1.5.4.14.1 to 1.1.5.4.14.3 and 1.1.5.5.

1.1.5.4.1   Hangar space measuring 642 square metres (sq. m.) at Guwahati airport was allotted (December 1995) to the Government of Assam (licencee) for housing a helicopter, without any formal agreement. The Authority did not raise bills against the licencee till March 1996, as it assumed that the Government of India would allow the licencee to use the land free of cost. However, when the Authority received no such directives, it claimed licence fee amounting to Rs.20.09 lakh for the period 1 March 1996 to 31 March 1998. The licencee, without clearing the bill, sold the helicopter to M/s. Pawan Hans Helicopters Limited (PHHL) and as such, the hangar space came under the occupation of PHHL with effect from 1 April 1998. The Authority raised (October 1999) a bill amounting to Rs.16.93 lakh for the period 1 April 1998 to 31 March 2000 against PHHL as licence fee for use of the hangar space. M/s. PHHL refused to pay the dues on the plea that they did not have any formal agreement with the Authority. This resulted in the non-realisation of licence fee amounting to Rs.37.02 lakh.

1.1.5.4.2   The Authority had not raised bills for licence fee amounting to Rs.1.69 crore recoverable from various Government parties viz. Coast Guard, Indian Air Force, Indian Navy, Customs Department and National Cadet Corps for the space allotted to them.

1.1.5.4.3   The Authority failed to enter into an agreement with the Central Public Works Department (CPWD) in respect of land at Agartala, Silchar, Guwahati and Dibrugarh airports under their possession even though the Government decided (February 1986) to levy licence fee at market rates for the land allotted to CPWD for construction of their residential quarters/stores and offices etc. The Authority did not raise bills for quite a long period due to non-availability of market rates, non-production of documents regarding allotment of land etc. to CPWD. As a result, licence fee amounting to Rs.95.09 lakh excluding interest for the period 1 April 1992 to 31 March 2000 could not be recovered from CPWD.

1.1.5.4.4    Licence fee amounting to Rs.78.85 lakh, excluding interest on account of land allotted to the India Meteorological Department at Guwahati, Dimapur, Dibrugarh and Agartala Airports for the period January 1993 to March 2000 were yet to be recovered.

1.1.5.4.5   Even though agreements (13 cases) for allotment of space/land to various agencies/airlines expired in March 1998, no action was taken by IAD, Delhi to renew them. These agencies were occupying land/space at the airport, even after the expiry of their agreements (June 2000). The Management stated (March 2001) that action for renewal of agreements was being taken.

1.1.5.4.6    A review of 202 major agreements (21-NAD, Mumbai and 181-IAD, Mumbai) relating to the three years ended March 2000 revealed that in 127 cases, valid agreements were yet to be executed (September 2000).

1.1.5.4.7    The lease agreement for two pieces of land measuring 8677.615 sq.m. and 3650 sq. m. allotted to the Oil and Natural Gas Commission (ONGC) for construction of a helipad and a base hangar expired in March 1985 and August 1985 respectively. Without renewing the lease agreement, the Authority increased the lease rent unilaterally from 15 January 1994. Against the lease rent of Rs.505 per sq.m. per annum revised by the Authority with effect from 1 April 1997, ONGC had agreed to pay at the pre-revised rate of Rs.411 per sq.m. per annum. In the absence of revised agreement, the Authority had not been able to realise an amount of Rs.80.29 lakh from ONGC for the period from April 1997 to June 2000.

1.1.5.4.8    The Authority had not taken any final decision so far (August 2000) on the rates since June 1996 in respect of land (for hotel/restaurant business) given to M/s. Shady Grove Hotel, who were earlier granted lease of 667.32 sq. m. of land by the Government of India (218 sq. m. in 1949 and 449.32 sq. m. in 1980). This resulted in the non-raising of bills amounting to Rs.24.06 lakh for the period from June 1996 to August 2000. Similarly, in the case of land measuring 1958 sq. m. allotted to M/s. Hem Chand and Company since 1946, the Authority failed to decide the matter regarding extension of the agreement after its expiry in August 1994, despite the fact that the rates offered by the party were much above the prevailing market rates determined by the Authority from April 1996 onwards. This resulted in non-raising of bills of dues amounting to Rs.60.76 lakh for the period from July 1996 to August 2000.

1.1.5.4.9    The car parking contract at Hyderabad airport had been continuing on adhoc basis since 1992, even though the rates quoted by some of the parties at the time of tender called for in March 1997, were higher than that of the adhoc contract. This resulted in revenue loss of Rs.25.72 lakh to the Authority during the period May 1997 to March 1999.

1.1.5.4.10    IAL was allotted (December 1960) a piece of land measuring 439.80 sq. m for a “Sports Club” at the old airport at Mumbai by the Civil Aviation Department for a period of 10 years. This allotment was further extended (May 1980) for a period of 10 years upto November 1980. However, in a survey conducted (1992) by the Mumbai airport, the total area occupied by IAL was found to be 22803 sq. m. As the Authority continued to levy licence fee for 439.80 sq. m. only, it had to suffer a loss of Rs.97.97 lakh for the period from January 1993 to March 2000. The Management stated (March 2001) that the case was under review for collection of charges as per the occupied area.

1.1.5.4.11    Government of India, Ministry of Civil Aviation allotted (November 1975) two plots of land measuring 1125.62 sq. m. to M/s. Kirloskar Oil Engines Limited for a period of 5 years from the date of taking over the possession (15 November 1975) for construction of hangars and apron at the Civil Enclave, Pune. The Authority, however, noticed (June 1990) that the total area occupied by M/s. Kirloskar Oil Engines Limited was 2356.06 sq. m. including the area for taxi track and the enclosed land south of the hangar. The Authority had neither executed any lease agreement for the additional land, nor raised any bills for additional land resulting in a loss of Rs.89.14 lakh.

1.1.5.4.12    The modification work at the international terminal building of Thiruvananthapuram airport was completed on 31 March 1998. As a result of the modification, the area hired by various agencies at the airport also increased. The Authority neither executed any revised agreement with the allottees for the enhanced area nor billed the allottees accordingly resulting in a loss of Rs.62.51 lakh.

1.1.5.4.13    M/s. A.S. Irani was allotted (November 1959) a plot of land measuring 240 sq. m. for a period of 3 years by the Government of India for running a restaurant at Mumbai airport. After the formation of the erstwhile IAAI in 1972, the party was given extension upto May 1977. When the Authority decided to award the contract for the space on open tender basis, the party approached the Court, which permitted (31 July 1978) the party to run the restaurant until evicted by process of law. The Authority initiated action under the Public Properties (Eviction) Act but later on, held it in abeyance. It was also noticed that besides the area of 240 sq. m., the party was also occupying an additional area of 373.72 sq. m. and had constructed 4 rooms on the first floor for boarding and lodging purposes. The Authority gave (1995) another extension to the party for a period of three years from May 1996 to May 1999 at the rate of Rs.111.32 per sq. m. However, while granting the extension, no decision was taken to (i) regularise/charge the licence fee for the additional area (ii) initiate action on the unauthorised construction of the 4 rooms (iii) initiate action for eviction of the area in possession of M/s. A.S. Irani for the last 41 years. The Management stated (March 2001) that the case was being reviewed for collection of charges as per the area occupied.

1.1.5.4.14    The Authority had been allotting land to various parties on licence/lease basis for a fixed period of time for running hotels/restaurants. As per terms of the agreements entered into with the parties, in addition to the normal licence fee/lease rent the latter were to pay royality being higher of (i) a certain percentage of gross turnover of the hotel/retaurant and (ii) minimum guaranteed amount. In order to ensure correct billing of royalty, the parties were required to intimate to the Authority the figures of their gross turnover. However, in a number of cases, the parties did not intimate the figures of their gross turnover to the Authority with the result that correct billing/recovery of dues from the parties could not be ensured. The Authority continued to raise bills on adhoc basis and did not take any penal action against such defaulting parties with a view to realise the correct amount from them. Details of a few cases examined during review are given hereunder:

1.1.5.4.14.1   M/s. A.B. Hotels was allotted (January 1992) 21350 sq. m. of land for setting up a motel at Mahipalpur in Delhi. As per the agreement, in addition to the normal lease rent, the lessee was required to pay royalty at the rate of 7.20 per cent of the gross turnover (GTO) of the hotel or a minimum guarantee amount, whichever was higher, from the expiry of three years from the date of taking over of land (1 January 1995). The lessee started operations from 26 March 1998. However, it was noticed that the Authority did not bill the lessee as per the terms of the agreement as it did not obtain the details of GTO to arrive at the correct figure of royalty. This resulted in the short billing of royalty by Rs.7.95 crore. The Management accepted (March 2001) that the bills could not be raised for want of the figures of the certified turnover.

1.1.5.4.14.2    The Authority allotted (1982) land measuring 14720 sq. m. at New Delhi to. M/s. Mohan Hotel Private Limited (Ambassador Group), now M/s. Narang International Hotel Private Limited, at the rate of Rs.50 per sq. m. per annum. The rates were further revised (April 1990) to Rs.70 per sq. m. per annum. As per the agreement, in addition to the licence fee, the lessee was required to pay royalty on the gross turnover of the hotel. It was, however, noticed that the Authority did not obtain the details of the gross turnover of the hotel to arrive at the correct figures of royalty. The lessee, on its own, paid Rs.20.16 lakh and Rs.20.21 lakh for the years 1996-97 and 1997-98 respectively. It was also noticed that the bills for the years 1998-99 and 1999-2000 had not been raised so far. It was not clear how the Authority had ensured that the correct payment of royalty was made by the lessee in the absence of the details of GTO. The Management accepted (March 2001) that in the absence of details, bills could not be raised and stated that the matter was being pursued.

1.1.5.4.14.3   The Authority allotted (April 1990) 15000 sq. m. of land to M/s. Oberoi Flight Kitchen (lessee) for operating a flight kitchen at IGI airport, New Delhi at a licence fee of Rs.70 per sq. m. per annum. As per the agreement, in addition to the above licence fee, the lessee was required to pay royalty on the gross turnover of the flight kitchen. It was noticed that bills for the years 1998-99 and 1999-2000 had not been raised against the lessee (August 2000). The provisional amount of these bills based on the payment made by the party according to their own computation worked out of Rs.78.23 lakh. The Authority did not have any mechanism to verify the figures of gross turnover furnished by the lessee. The Management confirmed (March 2001) that in the absence of certified GTO details, payment on GTO as worked out by the licencee, was being received. Thus, the chances of short billing by the Authority could not be ruled out.

1.1.5.4.15   The erstwhile NAA allotted (April 1989) a site measuring 8000 sq. m. consisting of a hangar, a club house, an administrative office, a car park, an apron and a taxiway to M/s. Ajantha Flying Club (AFC) to start flying activities at Aurangabad airport for a period of three years from the date of taking possession at the then prevailing market rate. However, later on, the Authority decided (November 1991) to charge a nominal licence fee of Rs.1 per sq. m. per annum from AFC subject to the use of the site exclusively for training activities of the club as per the approval of the Director General of Civil Aviation (DGCA) and as long as the club was covered by the subsidy scheme of DGCA. The licence was renewed from time to time till March 1998. Thereafter, no decision had been taken by the Authority to extend the licence (August 2000). It was noticed that even though AFC had not carried out any training activities from the beginning of the licencing period and was also not covered under the subsidy scheme of DGCA, the Authority continued to charge a nominal licence fee of Rs.1 per sq.m. per annum resulting in a loss of Rs.74.27 lakh.

1.1.5.4.16   The Chairman of the Authority allotted (October 1997) 3500 sq. m. of land at Mumbai international airport to M/s. Raymond Limited (lessee) at the rate of Rs.495 per sq. m. per annum which as per delegation of powers should have been allotted by the Board of Directors. The Authority had to cancel (July 1997) the allotment as it was in contravention of the AAI Act and delegation of powers. The lessee went for arbitration against the termination of the contract. The arbitrator directed (August 1999) the Authority to allot the lessee one vacant hangar at Juhu Airport. Accordingly, the Authority allotted (September 1999) a plot measuring 259.17 sq. m. at the rate of Rs.373 per sq. m. per annum for a period of one year. Thus, the irregular allotment, which had to be cancelled subsequently, resulted in non-utilisation (from August 1997 to August 1999) of the land measuring 3500 sq. m. with a consequent loss of revenue amounting to Rs.36.09 lakh.

1.1.5.4.17    Fourteen plots of land measuring 19553 sq. m. at different pockets of Mumbai airport were lying vacant from August 1996. The Commercial Advisory Board of the Authority approved (April 1999) the proposal for the commercial uses of these plots. However, the plots were yet to be put to commercial use (June 2001).

1.1.5.5   On behalf of the Authority, the various airlines collected Passenger Service Fee (PSF) at the rate of Rs.125 per passenger uplifted by them in the domestic sector. The collection made by the airlines was to be paid to the Authority after deducting collection charges of Rs.1 per passenger. Certain categories of passengers such as staff on duty, staff on leave, dollar paying passengers and infant passengers were, however, exempted from paying PSF.

It was observed in Audit that in respect of the passengers uplifted by Indian Airlines Limited, no data existed in the Authority to ascertain and verify the actual number of PSF paying passengers uplifted by the airlines so as to determine the amount of PSF recoverable from that airline.

However, on the basis of data in respect of such passengers provided by the airline and relied upon by the Authority, it was also noticed that there had been excess recovery of PSF amounting to Rs.4.07 crore in 1996-97 and short recovery of Rs.30 lakh and Rs.3.34 crore in 1997-98 and 1998-99 respectively from various ATOs. It was also observed that the Authority had been relying upon the data received from IAL and Air India Limited in this regard without any verification. A review of the records relating to PSF paid by IAL to the Authority indicated that IAL had made short payment of Rs.42.94 crore for the years 1997-98 and 1998-99.

The Management stated (March 2001) that based on the reconciliation statement furnished by IAL, the Management and the Board of the Authority had agreed that there was no short payment of PSF by IAL.

The reply of the Management is not tenable as no data existed in the Authority to ascertain the actual amount of the PSF recoverable from airlines and they had to rely on data furnished by the IAL in this regard. As such under the existing arrangement, the Authority had no independent mechanism to ascertain the accuracy of the amount due from the airlines towards PSF.

1.1.6    Cargo revenue

1.1.6.1    The Authority (erstwhile IAAI) was appointed custodian of air-cargo complexes with effect from 1975 at Calcutta airport, 1977 at Mumbai airport, 1978 at Chennai airport and 1986 at New Delhi IGI airport under Section 45 of the Customs Act 1962. Now, IAD of the Authority handles the cargo meant for import and export and collects the charges for the same. However, at Mumbai, the Authority had appointed Air India Limited as its ground handling agent (GHA) with effect from May 1977.

The main sources of cargo revenue were:

1. Cargo terminal and handling charges which included terminal storage and processing charges (TSP), carting and X-ray charges etc.

2. Demurrage charges on imports and exports.

Cargo terminals at various airports were collecting TSP charges on cash basis. Similarly, demurrage charges on import were also collected on cash basis from the importers. The bills for demurrage, utilisation and palletisation charges on the exports and destuffing, transhipment and X-ray charges on the imports were, however, being raised on the airlines.

1.1.6.2   A test check of bills for cargo revenue raised by the IGI Cargo terminal, New Delhi for two selected months of each of the three years ended 1999-2000 revealed non-realisation (Rs.77.72 lakh)/delay in collection of revenue and loss of interest of Rs.5.31 lakh (Annexure 1).

1.1.6.3    The bills for cargo revenue are generated by the Computers and Documentation Centres of the Authority and are sent to the Finance and Accounts Department for despatch to the various airlines on a monthly basis. The Finance and Accounts Department is responsible for monitoring the collection of the bills. The bills are delivered to the concerned airlines directly by hand, as almost every airline has its office in the cargo terminal complex. A review of these bills revealed the following:

1.1.6.3.1    As per the agreements signed with the airlines, the Authority is to raise bills on a monthly basis and the airlines are to make payment within 30 days. A review of the records relating to the receipt of dues in respect of the 897 bills revealed that in the case of only 6 per cent of the bills, the payment was received by IGI Cargo, New Delhi in time. In respect of the remaining 94 per cent bills, there were significant delays as per the details given below:

From the above, it would be observed that in respect of 82 per cent of the bills, delays ranged upto 285 days. This resulted in loss of interest of Rs.30.64 lakh. Payments amounting to Rs.81.28 lakh in respect of the remaining 12 per cent were still outstanding. (July 2000). The Management assured (March 2001) that they would look into the delays and instruct the concerned officers to avoid them.

1.1.6.3.2    As per Section 48 of the Customs Act 1962, imported consignments are to be cleared within 30 days from the date of landing at the airport. If the consignments are not cleared within the stipulated period, the Authority is authorised to dispose off the same through auction after observing the procedure laid down in this regard in Section 150 of the Act ibid. Under the provisions of Section 150 of the Act ibid, the balance, if any, of proceeds obtained from the sale of the goods is required to be paid to owner of the goods after applying these proceeds towards (i) expenses relating to sales; (ii) freight and other charges payable to the carrier of the goods; (iii) duty payable on the goods sold; (iv) charge payable to the person having the custody of the goods; and (v) dues of the Central Government recoverable from the owner of the goods in the order given herein. It was noticed that IAD Kolkata was holding such cargo weighing 92075 kg (July 2000) beyond the stipulated period. The Management stated (March 2001) that in future, efforts would be made to auction the left over cargo within the stipulated time limit.

It was also observed that IAD, Delhi realised a sum of Rs.5.03 crore from the sale of unclaimed/leftover cargo from April 1998 to August 2000 and apportioned the amount on 50:50 basis with the Customs department without following the procedure prescribed under Section 150 of the Customs Act. The Management stated (March 2001) that apportionment had been done as per the provisions of the Customs Act as amended. The reply of the Management is not tenable because the charges were apportioned equally between the Customs Department and the Authority in contravention of Section 150 of the Customs Act.

1.1.6.4   Ground handling activities and other ancillary services provided at international airports by various agencies including airlines were regulated under the International Airports Authority of India (General Management, Ground Handling of Air Transport Services) Regulations 1984.

The Authority increased (September 1984) the licence fee from 2 per cent to 10 per cent of the turnover achieved from the ground handling services by the service providers at the international airports. Subsequently, in response to the Authority’s seeking (December 1997) approval of the Ministry of Civil Aviation for increasing the fee to 11 per cent, the Ministry decided that until appointment of outside agencies for providing ground handling services at the airports, Air India Limited and Indian Airlines Limited would pay licence fee of 5 per cent of their said turnover from 1 February 1998.

Whereas Air India Limited and Indian Airlines Limited continued to render the ground handling services at the airports till the end of the year 1999-2000, the Authority did not raise any bills for licence fee on these airlines. Except for payments of Rs.37.75 lakh by Air India Limited and Rs.59,000 by Indian Airlines Limited for the year 1987-88, no other payments were made by these airlines on this account to the Authority.

A review of the annual accounts of the last five years ended 1999-2000 of Air India Limited and Indian Airlines Limited revealed that these airlines had disclosed in their annual reports the year-wise turnover achieved by them by providing the ground handling services and the turnover of the two airlines for these five years aggregated to Rs.1070.67 crore and Rs.364.10 crore respectively. Considering the licence fee even at the rate of 5 per cent for the period prior to the Ministry’s decision, the Authority could have earned licence fee of at least Rs.71.74 crore from 1995-96 to 1999-2000.

Thus, failure of the Authority to raise bills on Air India Limited and Indian Airlines Limited for the licence fee resulted in non-realisation of revenue of Rs.71.74 crore.

The Management contended (July 2001) that bills could not be raised due to non-availability of official figures of gross turnover from these airlines. They also stated that the matter had been taken up both with the Ministry and these airlines. The reply is not acceptable as the Authority could have raised ad hoc bills on the basis of the figures given in the annual accounts of these airlines. In fact, the Authority took up the matter with the two airlines in April 2001 only after the Audit pointed out the lapse in October 2000 and March 2001.

1.1.6.4.1   In Mumbai, the handling of cargo is being done by Air India Limited. which acts as the GHA of the Authority. As per the terms of agreement, the cargo charges in respect of cargo which is less than 14 days old is to be levied and collected by the GHA. The revenue so collected was to be shared between the Authority and the GHA in the ratio of 70:30. Cargo remaining uncleared for 14 days and above was to be transferred by the GHA to the custody of the Authority. The charges were to be collected by the Authority and the revenue so collected was to be shared between the Authority and GHA in the ratio of 70:30.

A review of the revenue transferred by the GHA during the last 3 years revealed that the GHA was not transferring the full share of the Authority. On an average, the monthly amount withheld by the GHA worked out to Rs.15.39 crore (67.3 per cent) in 1997-98, Rs.17.30 crore (31.6 per cent) in 1998-99 and Rs.15.96 crore (30.3 per cent) in 1999-2000. As per the terms of the agreement, the Authority was entitled to interest at the rate of 18 per cent per annum on the amount withheld by GHA. However, the Authority did not raise any bills for interest amounting to Rs.8.76 crore on the amount held in excess by Air India Limited during the last 3 years ended March 2000. The Management stated (March 2001) that efforts were being made to realise the outstanding amount from Air India Limited. They, however, did not explain the reasons for not raising the interest bills as per the terms of agreement.

The matter was referred to the Ministry in September 2001; their reply was awaited (October 2001).