AAI orders probe into revenue share from merchandising

Inquiry initiated into a complaint filed against AVA Merchandising Solutions Pvt Ltd, a Delhi-based company.

By: ENS Economic Bureau | New Delhi | Published: April 25, 2014 1:10 am

The Airports Authority of India (AAI) has initiated an inquiry into a complaint filed against AVA Merchandising Solutions Pvt Ltd, a Delhi-based company that provides in-flight shopping, advertisements and customer loyalty programmes to various airlines.

The contract between AAI and AVA Merchandising Solutions, under which the latter has set up collection centers at around 30 AAI airports in the country against which it is required to share with the state-owned airport operator an amount of Rs 3 lakh or 13 per cent of its gross turnover on a monthly basis, whichever is higher. The complaint, filed by a former employee of AVA Merchandising, a copy of which is with The Indian Express, alleges under-reporting of sales by the firm that has resulted in a loss in the revenue share for AAI.

An AAI Vigilance Department official confirmed that an investigation has been ordered on the basis of the complaint forwarded to it. “An inquiry has been ordered and allegations made in the complaint are being verified, both internally and externally,” the official said. The official added that a preliminary investigation report on the issue is in the process of being filed.

AVA, on its website, says that it is “the largest and most popular travel retailer in the subcontinent with a potential customer base of almost 2,75,000 people a day”. The complaint states that AVA Merchandising Solutions has been making an average sales of Rs 25 lakh per day across India but is allegedly under-reporting this to limit the revenue share with AAI.

“I would like to draw your attention to the fact that the company (AVA Merchandising Solutions) has been paying AAI a mere Rs 3 lakh per month for the past decade. The company has been willfully cheating AAI of its due of 13 per cent of the gross turnover. For your kind information, the company has been making an average sales of Rs 20 to 25 lakh per day across India,” the complaint, filed by a former employee said. He is learnt to have left AVA Merchandising in 2012.

The complaint alleges that the under-reporting of revenues is being done by AVA Merchandising Solutions with the aim of ensuring that AAI gets not more than Rs 3 lakh per month as its share of the revenue. AAI officials, however, pointed out that the revenue share received by them has been higher than Rs 3 lakh in certain months like July last year, even though the payout was limited to Rs 3 lakh in case of most months.

The complainant has also alleged that AVA Merchandising Solutions is paying higher amounts than what it pays to AAI to the airport operators of Delhi, Mumbai, Bangalore and Hyderabad.

“AAI airports cannot be compared with the private airports but this complaint is also being looked into,” the AAI official involved in the investigations said. When AVA Merchandising’s Director Amit Chopra was contacted for his comments on the issue, the company sent a legal notice wherein it is claimed that they were not aware of the inquiry and made vague threats.

The company had not reverted to a subsequent query sent to it on February 18, 2014 to ascertain if the legal notice sent by it should be considered as its official response. The Indian Express will reply to the legal notice.

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