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Canada court orders seizure of Air India, AAI assets over dues

By Aneesh Phadnis and Arindam Majumder
January 04, 2022 13:08 IST
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A court in Canada has ordered the seizure of amounts collected by the International Air Transport Association (IATA) on behalf of Air India and the Airports Authority of India (AAI).

Separate orders were passed on November 24 and December 21 on pleas by shareholders of Devas Multimedia Private Limited who have filed multiple petitions to enforce arbitration awards against the Indian government.

According to a Devas spokesperson, more than $30 million has been seized to date under the IATA action.


The development comes weeks before the Tata group’s takeover of the national airline after a successful bid last year.

The group has been granted indemnity from past legal claims in its shareholder agreement with the government.

Three shareholders of Devas, who won a $111 million arbitration award against the government, moved the Superior Court in Quebec for enforcement.

On their applications, the garnishment orders were issued.

Garnishment orders allow withholding of payments or attachment of assets of a debtor that are held by a third party.

“We will pursue the Indian government in courts worldwide to ensure the debts owed to Devas are satisfied.

"Our action in Canada has resulted in millions of dollars garnished by Devas shareholders, and represents the first fruits of a globally-focused effort to be paid,” said Matthew D McGill, partner at Gibson, Dunn & Crutcher, and lead counsel for several shareholders.

“Devas shareholders have been clear from the start: Despite state-sponsored investigations intended to intimidate and scare off the victims of India’s unlawful acts, we will continue to pursue Indian government’s assets to satisfy the awards, while remaining open to an amicable settlement,” McGill added.

Emailed queries to the ministry of civil aviation did not yield any response.

“On the intervention of Air India’s counsel, the commercial division of the Quebec Superior Court accepted to designate a judge on an urgent basis to hear the applications of quash and seizures brought by Air India, AAI and IATA.

"The hearing will take place on January 4, a day on which the court would normally be closed due to the holidays,” a senior government official said.

IATA assists airlines and air navigation service providers in collecting monies due from ticket sales and route navigation charges.

Its billing and settlement plan (BSP) mechanism acts as a payment gateway for travel agents around the world.

Remittances for ticket sales are made to an airline through the BSP.

Similarly, it collects route navigation charges from foreign airlines to India and for flights overflying the country and passes them to the AAI.

In FY20, AAI earned Rs 3,592 crore from airport navigational services (route navigation, terminal navigation and landing charges) and it accounted for nearly 28 per cent of the revenue.

Reacting to the order, Air India, on December 22, removed all its ticket inventory from the global distribution systems (GDS). Travel agents use GDS platforms like Amadeus or Travelport for issuing tickets.

The platforms are linked to IATA’s BSP, which keeps a record of all the sales carried out through this mechanism.

Over half of Air India sales come from GDS platforms and the sudden non-availability of its tickets created unease among travel agents.

“This is a nightmare during the festive season when most flights arriving into India are full and passengers need to connect to domestic destinations – often requiring rescheduling due to delays,” said Abbas Moiz, national general secretary of Travel Agents Federation of India (TAFI) in a press release last Monday.

Attempts to contact the senior management proved futile and sales persons have been stalling and attributing the problem to a technical issue without any official announcement, TAFI said in its Monday release.

The Travel Agents Association of India, too, wrote to the airline seeking clarity about the disruption.

Last Wednesday, Air India again put up its ticket inventory on GDS platforms but is allowing ticket issuance only via approved credit cards.

Agents also received text messages that any ticket issued against cash will be cancelled.

Payments through credit card are paid to the airline by bank or the credit card company.

Though IATA keeps record of credit card sales it is not involved in the collection and remittance process.

Other than credit cards, agents have the option to do a bank transfer to IATA for ticket sales.

These are known as cash sales and agents get up to seven days to make payments to IATA under this process.

Photograph: PTI Photo

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Aneesh Phadnis and Arindam Majumder in Mumbai/Delhi
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