Airlines/Joint Ventures (JV) are being given an advantage over private caterers in terms of cost of establishment and operation of flight kitchen by the Civil Aviation Authority of Pakistan (CAA), Competition Commission of Pakistan (CCP) observed.
The CCP said since all the players operate in the same market any incentives must be given equally so as to provide a level playing field to all.
In order to create level playing field vis-à-vis the application of royalty, the CCP has issued a policy note, which recommends amendments to the CAA Order on flight catering services at CAA airports.
The competition watchdog recommends CAA to charge royalty of USD 1.39 per meal from Airline/JVs on the meals provided to local/Pakistani airlines for international routes; or royalty of USD 1.39/- per meal charged from private caterers located inside CAA premises, for the meal supplied to local/Pakistani airlines operating on international routes may also be waived.
In its policy note, the CCP said meal royalties of Rs 50/- per meal for domestic routes may be applied uniformly on all operators whether airlines/JV or private caterer; or Islamabad International Airport (IIAP) Kitchen No.1 licensee i.e. KCL may also be exempted from the same.
Also, the CCP recommends CAA to amend clause 2.4.1 of the Order to make provision for tender for allotment of space in case of airline/JV in a similar manner to that applied on private caterers. Further, incentives with respect to adjustment of construction cost as provided to airlines/JV in Clause 2.4.3 of the CAA Order should also be provided to private caterers located in CAA premises, in order to create a level playing field.
Earlier in 2016, the CCP received concerns over CAA’s plan to establish a single flight kitchen at the IIAP on a joint venture basis. In order to assess the state of competition as a result of the flight kitchen as advertised by CAA, open hearing was conducted in September 2016. After hearing all the stake holders, the Commission issued an opinion in December 2016.
In 2017, CAA while taking into account the recommendations of the CCP’s in the Flight Kitchen Opinion invited the airlines, flight caterers and hotels to participate in an open tender for award of land space to establish non-exclusive flight kitchen facility at IIAP.
Subsequent to the award of tender, CAA vide its Order in 2018 implemented a new policy i.e. CAA Order. The commission noted that through the several incentives, airlines/JV are given an advantage over private caterers in terms of cost of establishment and operation of flight kitchen in CAA’s order. Therefore, CCP issued the Policy Note recommending amendments to the CAA Order dated 20th March 2018vis-à-vis the Flight Catering Services at CAA Airports.
Published in Daily Times, January 11th 2019.