Indian airlines are up in arms against a new fee to be imposed by the of Bangalore Hyderabad airports next month.
The much awaited two new southern airports have proposed to charge a so-called user development fee—of about Rs700 per passenger for domestic users, and Rs900 for international passengers—to offset their large investments.
At a meeting held in the capital on Tuesday and attended by senior airport, airlines and civil aviation ministry officials, the airlines expressed reservations over making the fee a mandatory part of tickets.
Costly service: Passengers may have to pay the additional surcharge. (Photo: Madhu Kapparath/ Mint)
“Airlines were all protesting so what we have suggested is that they have a graded model,” said a civil aviation official present at the meeting, who did not wished to be named.
A graded model could mean a smaller fee on short-haul routes, such as Bangalore-Hubli, and a higher fee for longer routes, such as Bangalore-New Delhi.
Indian passengers pay Rs2,025 as surcharges, including Rs1,650 for a fuel surcharge and Rs150 as a congestion surcharge—both of which go to individual airlines. A passenger fee of Rs 225 goes to the government for airport maintenance and security.
The low-cost carriers (LCCs) are likely to be hit the most if the new fee is levied. “New, high fees are a negative for all airlines, not just LCCs. The majority of customers will simply not pay the full weight of this burden. That is just a hard reality of the marketplace and that is the core issue that needs to be addressed,” said Bruce Ashby, chief executive officer of InterGlobe Aviation Pvt. Ltd, which runs IndiGo.
High airport charges could impact how airlines pick and choose airports as well.
“Ultimately, we are a business and we will fly where we can make money. If we cannot find a solution that works for us, then it may influence our capacity allocation decisions, going forward,” Ashby added.
The Hyderbad airport has offered to waive the fee for the first month of operations, starting 16 March.
A regulatory body, Airports Economic Regulatory Authority (AERA), which is meant to monitor airport charges and was expected to be in place well before key private airports start operating in March, is behind schedule.