Airlines criticise airport developer’s demand for 10% fee hike

Airlines criticise airport developer’s demand for 10% fee hike

New Delhi: The demand by the joint venture companies running Mumbai and Delhi airports to raise their charges by 10% for the second time this year has been criticised by the aviation industry, which feels it would add to the pressure mounted by the high jet fuel cost burden.

Both GVK-led Mumbai International Airport Ltd and GMR-led Delhi International Airport Ltd have separately written to the Civil Aviation Ministry seeking 10% hike in the airport charges, saying the hike was part of their concession agreement. The ministry is yet to take a decision on the issue but is examining the proposals from the private airport operators.

The industry, which recently gave an unprecedented strike call to protest high jet fuel prices and steep airport charges, is demanding no further hikes in the airport charges, which include levies for landing, route navigation, parking and facilitation.

Industry sources said when the sector was passing through extreme financial pressures, there was no real urgency for the ministry to allow a second hike in airport charges this year.

Seeking early steps to make the newly-created Airport Economic Regulatory Authority functional, they said any decision on these charges should be left to this body which should decide after a proper review of the entire gamut of problems being faced by the industry.

In February, the ministry had allowed the two airports to charge a development fee of Rs200 from domestic passengers and Rs1,300 from international fliers at New Delhi and Rs100 and Rs600, respectively, from local and overseas passengers at Mumbai. This would generate Rs3,370 crore for the modernisation of these airports.

While refusing to reduce state sales taxes on aviation turbine fuel at their recent meeting, the Empowered Committee of State finance ministers headed by West Bengal’s Asim Dasgupta has reportedly said it was of “critical" importance that the airport charges, which are governed so far by the ministry, be “reviewed and reduced".

According to industry figures, Kuala Lumpur airport charge about $203 to hande a small Airbus A-320 aircraft for a three-hour turnaround while Indian airports charge four times more at $1,060 for the same.

Figures showed that airlines would have to pay $2,331 for handling a long-haul flight of a Boeing B-777 in India while at Kuala Lumpur airport charges $753, sources said.

Similarly, Indian airports charge $3,471 to handle a Boeing B-747 jumbo jet for a three-hour turnaround, while Singapore’s Changi Airport charges are 40% lower at $2,476. While Dubai airport charges $1,341 to handle a big Airbus A-340 plane, Indian airports levy $3,282.

However, a newly-formed Association of Private Airports Operators (APAO) refuted these figures and quoted a survey by aviation consultancy firm Jacob Consultancy showing that Mumbai airport ranked 50th for its low airport charges.

The APAO, comprising private-led operators of airports in Delhi, Mumbai, Hyderabad, Bangalore and Cochin, said airport fees were raised by 10% in February, the first hike after eight years. It also claimed that these airports had exempted landing charges on smaller aircraft and were offering 15% discount on landing charges if the payments were made in 15 days from the date of invoice.

However, industry sources said the recent Delhi High Court ruling allowing continuation of the airport developed fees being charged by all private airport operators in the country, would encourage other airports also to go ahead with it, thus further increasing the cost of air travel and reducing demand.

Maintaining that airlines were opposed to any further hike in airport charges, the sources said this amounted to the travelling public financing airport modernisation. The Parliamentary Standing Committee on Transport, Tourism and Culture had earlier taken a similar stand and raised questions whether the private parties were unable to fund these plans.

Quoting figures of the International Air Transport Association, sources said India was imposing high overflight charges at seven profitable airports to cross-subsidise other non-profitable airports, a move which does not comply with International Civil Aviation Organisation (ICAO) norms. According to ICAO, the airport charges should be equitable in cost allocation to ensure there are no cross subsidies between users, they said.

While India raised its airport fees by 10% earlier this year, Malaysia slashed it by 50% in response to the economic downturn.