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Business News/ Politics / Policy/  AAI seeks landing, parking charges for smaller planes
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AAI seeks landing, parking charges for smaller planes

Airlines say this decision will disrupt their business, including plans to fly to small cities

Currently, small aircraft are exempt from paying landing fees, except in Delhi, and pay a fuel sales tax of only 4% as against 4% to 30% for bigger planes, as sales tax varies from state to state. Photo: Hindustan Times (Hindustan Times)Premium
Currently, small aircraft are exempt from paying landing fees, except in Delhi, and pay a fuel sales tax of only 4% as against 4% to 30% for bigger planes, as sales tax varies from state to state. Photo: Hindustan Times
(Hindustan Times)

Mumbai: The Airports Authority of India (AAI) wants to levy landing and parking charges on planes with fewer than 80 seats to shore up revenues and invest in building infrastructure, according to executives of the state-run agency that manages most of the nation’s airports, who declined to be named.

This will further raise costs for airlines and increase fares after the airports manager in September requested permission from the Airport Economic Regulatory Authority (Aera) to charge a minimum landing fee of 5,000 from all small planes arriving at the Chennai and Kolkata airports. This excludes training flights operated by flying clubs.

Currently, small aircraft such as ATR and Bombardier are exempt from paying landing fees, except in Delhi, and pay a fuel sales tax of only 4% as against 4% to 30% for bigger planes, as sales tax varies from state to state.

Airlines say this decision will disrupt their business, including plans to fly to small cities. The aviation ministry is charting an ambitious plans to connect smaller cities with the metros.

This is another instance of the aviation policy environment being totally broken, an airline consultant said, requesting anonymity. “The ministry’s stated objective of promoting connectivity to the non-metros through use of small regional aircraft will remain a pipe dream with the last remaining incentive on airport landing charges being withdrawn," he said.

AAI chairman V.P. Agarwal could not be contacted for comments. AAI, a unit of the aviation ministry, manages and operates 126 airports and 329 airstrips.

“We will be forced to re-evaluate our business model if the airports starts charging smaller planes," said Neil Raymond Mills, chief executive at SpiceJet Ltd, which has a fleet of 12 Bombardier Q400 planes. This accounts for 25% of its fleet.

Marking a shift from a typical low-fare business model, SpiceJet in August 2011 launched regional operations to fly to small cities. In November 2010, it placed an order for 30 Bombardier Q400 planes that can each accommodate 78 passengers.

“The Q400 became an immediate success and helped the company to strengthen its network connectivity," the company said in its latest annual report, adding that it planned to make Delhi its next hub for its Q400 operations to expand in northern India.

“As per the recent order of Aera, Delhi International Airport Ltd is charging aircraft of 80 seats or less at 10,000 per landing, approximately," a spokesperson of the airport operator said. “Studies have shown that the amount of airport resources used by the smaller aircraft is same as that required for larger aircraft."

The Mumbai airport was not yet charging small planes for landing and parking, said a spokesperson of the operator, without divulging whether it will be charging such a levy at a later date.

Jet Airways (India) Ltd, Kingfisher Airlines Ltd and SpiceJet are the leading carriers operating small planes in India. Jet Airways owns 20 ATRs. Kingfisher Airlines used to fly over 30 ATRs few years ago, but its ATR fleet has shrunk.

Airlines misuse the exemption on charges for small planes, according to an executive at a private airport company. “Exemption of charges for smaller planes was aimed at promoting regional connectivity. But airlines are using this exemption to market other routes," he said on condition that neither he nor his firm be named.

AAI’s move runs counter to the aviation ministry’s regional connectivity ambitions. On 21 September, aviation minister Ajit Singh said providing affordable air connectivity to remote and interior areas, especially in the North-East, was a priority.

Earlier in July, Singh had said his ministry would soon modify guidelines for acquisition of aircraft so that Indian carriers would prefer buying small planes that are needed to connect to such areas.

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Published: 30 Sep 2012, 11:59 PM IST
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