Mumbai: Just two days after Indian airlines sought government help, private airport operators in India have also requested government support, asking for a higher user development fee (UDF) for international passengers to compensate for revenue losses from the temporary 25% reduction in landing and parking charges. The operators have also urged the Ministry of Civil Aviation (MoCA) to ensure that airlines’ benefits from reduced charges also reach passengers in the form of lower ticket prices.
The request comes after the Airport Economic Regulatory Authority (AERA) directed the airport operators on April 7 to reduce the landing and parking charges for Indian airlines by 25% for three months. The measure aims to provide relief amid increased operational costs due to airspace closures and rising prices of aviation turbine fuel amid the West Asia war.
In a letter to the aviation secretary Samir Sinha on Thursday, the Association of Private Airport Operators (APAO) argued that while airports have taken a significant revenue hit to lower operational costs for carriers, airfares remain at record highs. The association includes operators of 14 Indian airports, including Delhi, Mumbai, Bengaluru, Ahmedabad, Cochin, Goa, Hyderabad, Guwahati, Jaipur, Lucknow, Mangaluru, Navi Mumbai, Thiruvananthapuram and Jewar.
The association has asked the ministry to ensure that the benefit of reduced landing and parking charges is passed on by the airlines to the passengers. “Given that airlines operate in a largely unregulated pricing environment, there is no enforceable mechanism to ensure that reduced charges translate into lower airfares. Consequently, the intended public benefit may not fully materialise, while airports alone bear the entire financial burden,” the letter stated, adding that the ministry should ask state governments to reduce value-added tax to 5%.
However, APAO has claimed that the reduced charges will materially impact their immediate cash flows, debt repayment ability and operational sustainability. The operators have requested that the ministry help the airports true up the under-recovery from the aggregate revenue requirement by increasing the UDF for international passengers once the 25% reduction in aeronautical charges period comes to an end.
“Airports in India, particularly those with substantial exposure to international traffic, are facing traffic reductions, revenue losses, cost escalation and operational risks. Besides, the airport operators also bear significant losses of non-aeronautical revenue, which are lost forever, and there is no way to recover them,” the letter said.
Notably, Indian airlines asked the union government for intervention amid rising operational costs driven by higher ATF prices, warning of operational revisions. The civil aviation ministry is now caught in a delicate balancing act, as on one hand, the airline industry is struggling with a dip in traffic and skyrocketing fuel costs, whereas on the other, private airport operators and airlines claim their financial viability is at risk.
