Citizens' Issues
Public Interest Exclusive
Airports Authority conned by bounced cheques

Airlines and other airport service operators, which have issued cheques amounting to Rs7.23 crore to AAI’s Southern Region, have bounced. AAI is silent about it

Airlines such as Air India, JetLite, Paramount Airways, along with other parties operating at the airport, which have issued cheques amounting to Rs7.23 crore to airports under the Airports Authority of India’s (AAI) Southern Region, bounced. The information furnished under a Right to Information (RTI) application.

The RTI application was filed by Pune-based activist Sanjay Shirodkar with AAI’s Southern region, to seek the details of cheques it received from 2000, which later bounced. According to the reply, 25 cheques from 2006 till today, amounting to Rs5.8 crore, which were issued to Chennai and other airports controlled by it, got bounced. Mangalore airport received seven cheques of a total amount of Rs1.7 crore issued on 15th September 2009 by Air India which were dishonoured, while Hyderabad Airport was issued one cheque of Rs1.6 lakh, by Air Deccan, which bounced.

“I don’t know if the amount has been recovered, compounded or settled. But I pity the aviation sector. While the ministry of civil aviation is talking about modernisation of all airports, there seems to be no co-operation in paying the fees by the airlines and other parties for using the airport,” says Mr Shirodkar.

According to the list, Paramount Airways issued three cheques in 2007 and 2009 for a total amount of Rs4.1 crore, which bounced. Interestingly, Paramount, which was started in 2005, had to shut its operation two years ago after the Directorate General of Civil Aviation (DGCA) had de-registered its three planes. The action came after the airline was embroiled in payment battle with GE Capital Aviation Service and Celestial Aviation Trading, its lessors. Paramount was the only airline to offer business class service at a cost which at price in par with the fares of economy class of other airlines.

The RTI reply also revealed that Air India issued eight such cheques of Rs1.7 crore, Air India Express issued seven cheques of Rs95 lakh, while JetLite issued five cheques amounting Rs28 lakh which bounced.

The national carrier Air India is also in deep financial turmoil. Recently the union government announced a financial restructuring plan for Air India where Rs30,000 crore will be infused in the carrier till 2020. The same goes for JetLite. According to a report, Jet Airways has phased out its low-cost service JetLite, which was launched in 2007 and rechristened it as JetKonnect—another low-cost brand. In the third quarter of FY11-12 Jet Airways lost Rs101 crore while JetLite had a loss of Rs21 crore. The financial crisis is the main reason for merging the low-cost brands.

An RTI application filed by Mr Shirodkar revealed that that Kingfisher Airlines had issued five cheques amounting Rs122 crore between August 25, 2011 and February 21, 2012 to the AAI which bounced due to insufficient funds. According to news reports, the AAI had not initiated any action against the airline.

Mr Shirodkar had also sought the list of instances of cheque issued to Pune and Ahemdabad airports, which were dishonoured.

According to the list, from 2000 to 2012, the Ahemdabad airport received cheques which later bounced from airlines such as Emirates Airlines, Qatar Airways, SpiceJet, Indigo Airlines, and others like Flemingo Duty Free Shop, Blue Dart Aviation, Akbar Travels, etc. Interestingly, the reply received from the AAI relating to cheques received by the Pune airport which were dishonoured did not include a single airline company name but only included other parties operating at the airport providing services such as PK Hospitality Services, Mercury Car Rentals Service.



Shadi Katyal

5 years ago

One should ask simple question that if the first cheque bounced due to lack of funds of any airline why is not mandatory to accept only Cashier cheques . Why even allow usage of airport while old cheques are bouncing and new one are being presented.
Does the left hand know what right hand is doing or bureaucracy just moves on with blindfold.
In our nation which is run by Babus trhe reply will be we jut follow the rules so what are the rules

Personal Finance Exclusive
Do service centres authorized by car insurers overcharge?

There can be enormous difference in the insurer-authorized service centre estimation as compared to the roadside repair shops. Is it justified? Are insurance companies being fleeced which means you end-up with higher premium?

Imagine an ICICI Lombard-authorized service centre giving quote of Rs44,390 for labour and parts when you could have roadside shop fix your Honda City for only Rs5,000. It happened for one customer and hence it leads to the question whether insurance companies are ripped off by service centres they have tied up with? If so, are you paying extra premium to compensate for the profits made by the service centres? We know of some hospitals overcharging when you declare that you have a health insurance policy. If your car needs treatment, why should you expect authorized service centres behave anything different than hospitals?

ICICI Lombard did defend its position. According to Shankar Nath, Head- Direct Channel and Marketing, ICICI Lombard, “We did visit the service centre. As per them, the bumper, both tail lights and boot lock needed replacement. Repair of some panels, painting of all repaired and replaced parts and other miscellaneous work was mentioned. We could have assessed whether all of this was required or not by surveying the vehicle. Claims are approved and settled only as per policy terms and recommendation of the surveyor, and not solely on the basis of an estimate from a service centre. We did not receive any claim intimation for the said accident. In the absence of claim documents or photographs of the damaged vehicle, it is not possible to comment on what would be the cost of repair.”

Mr Nath explained the factors which affect the cost of repairs. He says, “The cost of repair depends on factors such as:

i)    whether parts are replaced or repaired (which, in turn, depends on the recommendation of surveyor considering the actual damage, roadworthiness of the vehicle after depreciation)  

ii)    labour cost; and

iii)    parts used while repair of the vehicle (whether locally manufactured or of authorized manufacturer, to ensure safety of the occupants of the vehicle).”

Do you replace or repair? Mr Nath adds, “In several instances we find that replacements can be avoided, thus bringing down the overall estimate. We also get discounts on the standard rates to minimize the claims cost. But we could not do any of that assessment in this case as the insured went ahead with the repairs without any claim intimation to us. I would like to assure you that we have robust internal systems for identifying and eliminating frauds in the claims process.”

It is worth getting a view from dealer service centre to know more about the working of a surveyor in this industry. According to senior official from a leading dealer service centre, “The main job of an insurance company surveyor is to check the veracity of the case. Whether it is accident damage or breakdown and to check if damage corresponds to the description in claims form? In few cases the surveyor will dispute the service centre for its estimate on car repair. This is because when the insurance company chooses the service centre for a tie-up after its verifications, there is an understanding on the levels of service.” If true, it is possible that the surveyor in the above case may not have really reduced the estimate.

Go with service centre or roadside shop? He adds, “There is huge difference in the approach of dealer service centre and roadside shop. A service centre has to work as per certain conditions, which ensures that the car’s problem is not temporarily fixed. The roadside shop does not care if the same problem arises again. It is like difference between eating at a good restaurant versus at roadside vendor. Service centres do have tendency to replace parts instead of repair, but it is about providing high service standards for customer satisfaction with quality work. Today, no one wants repairs. How many repair a laptop? They replace the bad part. Most foreign manufacturers do not believe in repair. Manufacturers make money on parts replacement, not service centres.” The reality is that service centres also have profit margin on parts.

Here is a view from KN Murali, head of motor insurance at Bharti AXA General Insurance, which is in line with feedback from ICICI Lombard:

The customer has the choice to leave his vehicle for repairs with any service centre. At Bharti AXA, we are concerned about the safety of the insured person and are focused on quality of repairs and genuineness of spare parts replaced. We are particular that post repairs the vehicle should be roadworthy and should not be cause for any other accident in future.  

It would be difficult to generalize that all authorized service centre unnecessarily inflate the quote. There may be a one-off situation where an authorized service centre artificially inflated the repair cost. We have competent surveyors in our organization who will be in a position to find out the actual repair cost. We invest in training to understand latest trends/costs in repairs of different vehicles. We bank on the competence or expertise of our surveyors who would save us from paying inflated repairs bill.

The customer is benefited in the short and long run if the claim outgo is controlled. There is an element of depreciation in every accident claim; depreciation is dependent on the age of the vehicle and the type of parts. Higher the cost of spare parts, the customer has to pay a higher amount from his pocket. Insurers might charge a higher premium from the customer at the time of renewal if the actual claim outgo is far higher

The example that you quoted will arise when repairer might insist on “replacement of a spare part” than repair the component.  Unless the damages are extensive and cannot be repaired effectively, it is not worth to go for replacement for all the parties concerned.

a.    Repairer has “profit margin” on spare parts and that could be reason to insist on replacement. However, if the service centre is assured of margin in body shop labour charges, many service centre accept the proposal to repair the component.  

b.    Customer does not have to bear the ‘depreciation’ portion.

c.    Insurer’s ultimate outgo is also restricted.

That would be win-win situation for all the parties—service centre, customer and insurer.  Convincing repairer and the client would help us to wriggle out of such situations.

To conclude, the insured will have to be wary of the estimate given by the service centre. It is better to get a final estimation after the surveyor has made an evaluation of the damage. If you think it is high and you end up paying high depreciation amount for the replaced component, it will be worth checking if the roadside shop can do the needful with fraction of the money. This way for small claims, your no-claim-bonus (NCB) will not be affected. If there is a genuine need for a service centre to work on your car, do not hesitate. You got the car insurance ‘Own damage’ cover for this very purpose. Let the insurance company worry if they are getting fleeced by service centres.



D Mehta

5 years ago

It is true that there is a substantial difference of repairing and replacement charges for vehicles when it is put before an authorised service dealer compared to the others in the market. This is formost reason for constantly increasing premium for insurance of vehicles.

Sensex, Nifty indecisive: Friday Closing Report

Monday’s move may decide future short-term direction, which may be up

Although the market snapped its two-day losing steak, it pared off all the morning’s gains on dismal global cues and as investors pondered over S&P’s downgrade. At present the Nifty is indecisive and Monday’s move may decide the future trend. The National Stock Exchange (NSE) saw a volume of 56.87 crore shares.

The market opened unchanged as the markets in Asia were mixed in morning trade following a Standard & Poor’s downgrade of Spain’s credit rating. The Nifty opened unchanged at 5,189 and the Sensex rose 17 points to resume trade at 17,145.

Brushing the global weakness, the domestic benchmarks soon hit their day’s high on across-the-board buying, which also helped the sectoral indices trade higher. At the highs, the Nifty touched 5,223 and the Sensex climbed to 17,242.

The indices managed to hold to the gains till late morning trade, after which profit booking resulted in the market wiping its gains and venturing into the negative. The market fell to its intraday low in the noon session following a lacklustre opening by the key European indices. At this point, the Nifty fell to 5,154 and the Sensex went back to 17,022.

However, the market managed to recover from its lows and close flat with a positive bias, ending its two-day losing streak. The Nifty added two points at 5,191 and the Sensex while the rose by three points to finish at 17,134.

The advance-decline ratio on the NSE was negative at 644:1006.

The broader indices settled in the negative with the BSE Mid-cap index losing 0.11% and the BSE Small-cap index declining 0.42%.

BSE Consumer Durables (up 1.44%); BSE IT (up 1.20%); BSE TECk (up 0.67%); BSE Bankex (up 0.16%) and BSE Auto (up 0.13%) were the key sectoral gainers. The top losers were BSE PSU, Fast Moving Consumer Goods (down 0.84% each); BSE Metal, BSE Realty (down 0.83% each) and BSE Capital Goods (down 0.34%).

ICICI Bank (up 2.28%), which posted better-than-expected results was the top gainer on the Sensex. It was followed by Hindalco Industries (up 2.15%); GAIL India (up 1.53%); Infosys (up 1.36%) and Mahindra & Mahindra (up 1.21%). The main losers on the index were Coal India (down 2.24%); State Bank of India (down 1.55%); BHEL (down 1.47%); Bajaj Auto (down 1.43%) and Jindal Steel (down 1.41%).

The Nifty was led by Hindalco Ind (up 2.54%); ICICI Bank (up 2.25%); HCL Technologies (up 1.72%); Infosys (up 1.63%) and GAIL India (up 1.61%). SAIL (down 3.02%); Coal India (down 2.35%); IDFC (down 2.34%); ACC (down 2.06%) and SBI (down 2%) were the main losers.

Markets in Asia, which were mixed in morning trade, settled mostly lower as European concerns overshadowed the Bank of Japan’s announcement that it would increase its asset purchase programme by 10 trillion yen ($124 billion).

The Shanghai Composite fell    by 0.35%; the Hang Seng declined 0.33%; the Jakarta Composite dropped 0.39%; the KLSE Composite tanked 0.75%; the Nikkei 225 fell by 0.43% and the Taiwan Weighted was down by 0.54%. Bucking the trend, the Straits Times settled flat at 2,982 and the Seoul Composite gained 0.58%. At the time of writing, two of the three the key European benchmarks were in the green and the US stock futures were mixed.

Back home, foreign institutional investors were net sellers of shares totalling Rs376.08 crore on Thursday. On the other hand, domestic institutional investors were net buyers of shares amounting to Rs63.49 crore.

Two-wheeler manufacturer TVS Motor Company has signed a memorandum of understanding (MoU) with Central Bank of India to offer loans for its three wheeler TVS King at all 4,000 branches. As per the agreement, the bank will offer 90% funding to TVS King customers, TVS Motor Company said in a statement. The stock declined 1.66% to close at Rs38.55 on the NSE.

Kolkata-based NBFC Magma Fincorp plans to set up a 100% subsidiary for housing finance. The company will soon apply for a licence to the National Housing Bank, said Sanjay Chamria, vice-chairman and managing director, Magma. The stock gained 1.58% to close at Rs70.90 on the BSE.

MRF has begun tyre production at its new Rs900 crore plant in Tiruchi (Tamil Nadu).The plant which will manufacture a full range of tyres, will cater to both domestic and export requirements. The stock rose 0.18% to settle at Rs11,251.10 on the NSE.


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