Get set for major hike in airfares
India’s state-owned airport developer Airport Authority of India (AAI) that operates 125 airports – with 86 operational airports – has filed a tariff proposal before AERA, demanding a hike in airport charges ranging between 100 and 400 per cent
New Delhi: India’s aviation sector is heading for a major hike in airfares as the Airports Economic Regulatory Authority (AERA) is consulting with stakeholders of major airports for revising airport charges, such as navigation, parking and fees for various airport facilities used by airlines, that have not been reworked since 2001.
India’s state-owned airport developer Airport Authority of India (AAI) that operates 125 airports – with 86 operational airports – has filed a tariff proposal before AERA, demanding a hike in airport charges ranging between 100 and 400 per cent.
Earlier this week AERA recommended a 340 per cent hike in airport tariffs for the Delhi airport, which is operated by Delhi International Airport Ltd (DIAL) – a GMR-led consortium.
A top industry official said that AERA is recommending a three-fold hike in airport charges at the Delhi airport, which will set the trend for other major airports as well and push up airfares further.
“It is not only the greenfield projects (new airports) at Bangalore and Hyderabad and the Mumbai airport that will see multi-fold hike in tariffs, other major airports operated by the Airports Authority of India (AAI) will also witness multifold increase in airport charges that have not been hiked since 2001,” said the official on conditions of anonymity.
Top civil aviation ministry officials said they have no jurisdiction over AERA’s recommendations or decision on airport tariffs.
AERA chairman, Yashwant S. Bhave told Mail Today on Friday that all airports have filed their tariff proposal with it.
“AERA will analyse the issues of the consultation paper, hold meetings with stakeholders and finally determine the tariff. If any operator is not happy he can go to the appellate authority of the AERA. Each airport has different aeronautical charges, capacity, investment and equity are different. Each airport will be taken one by one. It is a continuing process,” he said.
Under the Airports Economic Regulatory Authority of India Act, 2008, AERA determines the tariff for the aeronautical services, airport charges, ground handling services, passengers service fee and cargo at an airport, access development fee (ADF) and user development fee (UDF) at major airports.
Airport charges in India are among the lowest in the world and the charges constitute less than four per cent of an airline’s total operating cost, according to Association of Private Airport Operators (APAO), a global airport and aviation consultancy.
Airport charges in India currently constitute only about 3.25-3.5 per cent of total operating cost of airlines as compared to jet fuel, which constitutes 40 per cent of airline’s operating costs.
Foreign airlines have opposed the hike in airport charges at Delhi airport. British Airways, Air France-KLM and Lufthansa have said they would have to rethink their expansion plans, if the charges were increased. AirAsiaX, which recently discontinue few of its flights out of India and said the hike would impact its plans to make Delhi airport its aviation hub.