Aircraft maintenance is the overhaul, repair, inspection or modification of an aircraft or aircraft component.
In Canada, maintenance includes the installation or removal of a component from an aircraft or aircraft subassembly, but does not include:
Elementary work, such as removing and replacing tires, inspection plates, spark plugs, checking cylinder compression etc., on small privately operated aircraft ; or removal and replacement of fuses, light bulbs etc., on transport category aircraft .
Servicing, such as refueling, washing windows.
Any work done on an aircraft or aircraft component as part of the manufacturing process, prior to issue of a certificate of airworthiness or other certification document.
Last quarter saw the three major Indian airports — Mumbai, Delhi and Hyderabad — increase their revenues from commercial rentals.
The share of non-aeronautical earnings in airports’ total revenue is swelling as crashing air traffic movements (ATMs) crimps their aeronautical revenue and income generation from non-airline business goes up.
Aeronautical charges are directly related to airport infrastructure and levied for the use of an airport’s runway, apron and terminal facilities by passengers, while non-aeronautical income is earned through rentals from commercial outlets or concessionaires within airport terminals and from passengers.
Last quarter saw the three major Indian airports — Mumbai, Delhi and Hyderabad — increase their revenues from commercial rentals, advertising on their premises, parking fee and other such services.
This pushed up the percentage of Mumbai International Airport Ltd’s (MIAL) and Delhi
International Airport Ltd’s (DIAL) non-aeronautical revenue by 10 percentage points to 39% and 65% in the June quarter this year from 29% and 55% respectively last year.
Hyderabad airport, which began operation in March last year, has also seen its non-aeronautical revenues jump to 44% of its total revenues in the same quarter. It was negligible a year back.
Kapil Kaul, chief executive officer (CEO) of Centre for Asia Pacific Aviation-India and Middle East, said the recent spurt in non-aeronautical earnings was mainly because such a revenue stream has now been inbuilt in the business model of new and modernized airports.
“Earlier, duty-free and domestic retailing, food and beverages and such services did not exist at airports. Today, airports are leveraging these avenues of revenues. It will go up further in coming times to reach the international benchmark of over 70%,” he said.
Higher non-aeronautical revenue helps airports reduce dependence on income from airport
charges, which can fluctuate with the swings in the ATMs. It also cross subsidizes airport charges, making them competitive for airlines.
Over the last one year, airports have been witnessing drops in the ATMs, with airlines cutting back capacity to tune it air passenger traffic growth. According to the latest data put out by Airports Authority of India (AAI), total ATMs in May were down 4.6% year-on-year, while passenger traffic slipped 3.2%.
This is forcing airports to aggressively look at non-aeronautical revenues. For MIAL, the major contributor to this segment of income was vehicle parking, followed by duty-free retailing.
“In the duty-free retailing, we saw brisk sale of tobacco and liquor products. We also earned from selling advertisement rights at our premises,” said a senior MIAL official, who did not want to be named.
The Mumbai airport currently has 38 counters at the domestic and international terminals, including airline lounges, duty-free retail outlets and food counters.
An analyst said with retailing at airports picking up, rentals for commercial space were slowing climbing up and this was further boosting non-aeronautical revenues.
“Airports are renegotiating rentals upwards when contracts are coming up for renewals,” he said.
There could be several reasons for poor workmanship including poor supervision or insufficient funds.
Which brings us to the question we are posing here: Is AAI badly off? Or, should it be running airports at all or would it be better off just administering airports for a fat fee?
Both Mumbai and Delhi airports were privatized a few years ago. But it’s not a complete privatization – AAI has a 45% claim to the revenues of each of the airport companies, Mumbai International Airport Ltd (MIAL) and Delhi International Airport Ltd (DIAL). In the last 5 years, the AAI has earned Rs 4,749 crore thanks to its share of revenue.
More specifically, since 2007, almost 20% of its current annual revenue comes from its stakes in Delhi and Mumbai Airport. And a small amount from Bangalore and Hyderabad airports where it has a 13%
stake.
Airports operated as autonomous entities, under public or private ownership, are normally required to provide the following financial statements: a) income statement (revenue and expense statement); b) balance sheet; and cash flow statement. In order to produce the financial statements, a system must be developed for identifying various types of financial outlay and receipts. This involves establishing individual accounts, each showing a specific type of revenue, expense, asset or liability and cash flow.
While the income statement, as indicated in paragraph 3.14, shows the revenues and expenses of the airport over a specific time period, the balance sheet is a snapshot of the financial health of the airport on a specific date, showing the value of assets and liabilities in relation to the net value or equity (including retained earnings). The number of accounts established for a specific airport accounting
system will depend on the degree of detail sought, i.e. the more elaborate the system, the greater will be the subdivision of accounts established.
Accounts recording revenues and expenses can be maintained on an accrual accounting basis or a cash accounting basis. Under accrual accounting, revenues are credited to the period (usually the financial year) in which they are earned and expenses charged to the period when they are incurred.
Alternatively, under cash accounting, revenues are credited to the period when they are received and expenses recorded when paid. Accrual accounting systems reflect the financial position of the entity concerned better and are based on standard accounting practices.
In many cases, the financial statements of the airport may include operations that do not relate to the airport in question. For instance, the airport entity may operate several airports, air navigation services or even a local port. In other cases, some airport operations may be carried out by other entities and reflected in their financial statements. For instance, a department of public works may construct and provide capital assets to the airport, or the national telecommunications department may provide services to the airport without charge. In cases where the financial statements of the entity operating the airport do not reflect the operations of the airport in totality, some additions to and subtractions from the airport’s financial statements will be required to ensure that a true and fair financial picture of the airport is provided. It is generally good practice to do this following the accounting conventions incorporated in the financial statements.
For various purposes (e.g. to obtain financing or to recover costs), it could be necessary to convert the financial statements into a format familiar to a lending institution or an international airline.
International accounting principles, such as the Generally Accepted Accounting Principles (GAAP), or
International Accounting Standards (IAS), or any other similar recognized standard would be acceptable.
In business, revenue or turnover is income that a company receives from its normal business activities, usually from the sale of goods and services to customers. In many countries and states, revenue is referred to as turnover. Some companies receive revenue from interest, royalties, or other fees. Revenue may refer to business income in general, or it may refer to the amount, in a monetary unit, received during a period of time, as in "Last year, Company X had revenue of $42 million."
Profits or net income generally imply total revenue minus total expenses in a given period. In accounting, revenue is often referred to as the "top line" due to its position on the income statement at the very top. This is to be contrasted with the "bottom line" which denotes net income.
The identification and subsequent recording of items is usually more easily accomplished for revenues than for expenses. This is chiefly because revenue sources tend to be fewer in number than expense items, and because each revenue item, with few exceptions, is often easily identifiable with only one type of source, whereas one expense item can frequently be identified with several major expense categories. The information required in an accounting system for airports can vary considerably in detail and layout. The precise level of detail will depend on management requirements at the particular airport concerned. However, there is a basic itemization of revenues and expenses that may be considered a minimum, which is described below.
REVENUES
Revenue items that may be considered essential to meet the basic data needs of an airport management are outlined below as they might appear in a statement of revenues and expenses (the items shown are not intended to present an exhaustive list of the different sources of revenue).