Airfares may go up on govt plans to raise airport charges by 10%
New charges, applicable from this month, are over and above the Rs8,500 cess per flight slapped on most domestic flights to fund the Udan scheme
New Delhi: Airfares may soon go up as the government has decided to increase airport charges by about 10% across the country. The new charges, which will become applicable from this month, are over and above the Rs8,500 cess per flight slapped on most domestic flights to fund the civil aviation ministry’s ambitious regional connectivity scheme Udan.
“The increase is about 10% across the board,” said a person with knowledge of the matter who did not want to be named.
The charges will apply to all aircraft in the country, besides airlines. They include route navigation, landing and parking charges, according to a 24 November circular from the Airports Authority of India, issued with approval from the civil aviation ministry and reviewed by Mint.
Airport charges make for about 7-10% of an airline’s costs, which could mean an increase of about 1-1.5% in airline costs due to the latest charges, said a second person aware of the matter who also did not speak on record.
“This increase will be a disaster for the industry,” the second person said.
Foreign airlines will also have to shell out more money for flying over India. Because of its geographic location, India gets a substantial amount of revenue in overflying rights and in foreign currency. All flights going from South East Asia to the Middle East and Europe and back typically overfly India.
Besides airport charges, airport development fee—or the money spent in building and maintaining the facility—has also been increased at four airports, including the one at Varanasi, Prime Minister Narendra Modi’s constituency. The fee at Varanasi airport has been increased from Rs150 to Rs165 for domestic passengers and from Rs975 to Rs1,073 for international passengers.
In Punjab’s Amritsar, airport development fee goes up from Rs150 to Rs165 for domestic passengers and from Rs910 to Rs1,001 for international passengers.
Charges at Tiruchirapalli and Udaipur have also been increased effective from December
The first person quoted above said at least at some of the major airports, charges have been allowed to remain very high despite orders by the regulator, Airports Economic Regulatory Authority of India, to reduce the burden on passengers.
Ironically, these increases come at a time when the civil aviation ministry is pushing its regional aviation policy Udan, asking states to take cuts in their charges.