Higher airport charges are unlikely to have a major cascading impact on air fares as it accounts for less than 10 per cent of a carrier’s operating costs, according to airport sources.
While the quantum of airport charges has been a matter of debate in the country, where the aviation sector has high growth potential, the government is now looking at ways to address the issue of high air fares, especially during festive seasons.
An analysis of the financials of airlines indicates that airport charges are not a major cost factor as it accounts for less than 10 per cent of the carriers’ operating costs, according to airport sources.
Passing on the reduction in air fuel prices to passengers would result in low air fares substantially while a cut in airport charges is unlikely to have a major impact, they added.
Aeronautical tariffs include the parking, landing and navigation fees for airlines, besides levies on passengers under the user development fees.
In July, the International Air Transport Association (IATA) Director General and Chief Executive Tony Tyler had said that globally, most airports take into consideration revenue from both aeronautical and commercial activities to determine the level of airport charges.
Voicing concerns over the government’s plan to privatise the four state-run airports, he had said it might result in a steep hike in user fees.
In August 2012, the government allowed the GMR-run Delhi Airport to hike user charges (aeronautical fees) by a whopping 346 per cent after the Airports Economic Regulatory Authority (AERA) shot down GMR demand for a 774 per cent hike in the same.
Last year in March, the Mumbai airport steeply hiked the aeronautical charges by over 300 per cent and in June 2014, AERA allowed an over 100 per cent hike in user charges at the Bangalore airport.
In February this year, AERA had proposed a sharp 80 per cent reduction in the airport charges at the Delhi airport, but the GMR group has sought a directive from the Airports Economic Regulatory Authority Appellate Tribunal to put on hold the proposed reduction in the user charges.
During a meeting with the government on September 15, domestic carriers sought time to come up with their proposals to address the issue of “high fares”.
The meeting came against the backdrop of rising concerns expressed from various quarters over steep fluctuations in air ticket prices.
