Commerce Ministry has decided to restrict the purchase of alcohol to one bottle from two bottle, Aviation authorities, especially the Airports Authority of India (AAI) has raised concern because liquor is one of the tourist attractions at airport and it also generates revenue. The reduction of alcohol allowance at duty free shops at Indian airports will directly impact the revenue. Association of Private Operators said that the government’s decision will lead to a loss of around Rs 650 crore revenues for airport operators. This is likely to lead to a steep hike in user charges for travelers. The proposal to restrict alcohol sale at duty free shops will further increase aeronautical charges at airport by at least Rs 200 crore annually. The Commerce Ministry had made the proposal to the Finance Ministry ahead of the union budget with an intention to reduce trade deficit.
With the implementation of this order, flyers can expect ticket rates on the rise. This is also because airports run primarily on non-aeronautical income such as duty-free shops, restaurants, cafes and so on. To object this limit private airport operators along with the AAI are going to approach the government to reconsider the proposal. This comes at a time when the Association of Private Airport Operators (APAO) recommended increasing the current alcohol allowance from two bottles to four.
The AAI mentioned that the reduced liquor allowance will mean an increase in landing and parking charges on airlines, which they will happily pass on to their customers. It’s clear that a loss of revenue doesn’t help anyone. Meanwhile, Commerce and Railways Minister Piyush Goyal said, “It’s not a question of large or small (quantities). As a nation, we are not encouraging the import of alcohol.” However, not everyone agrees with the Commerce Minister.
A CEO of a private airline said, “It will be a blow to duty-free companies and airports. Duty-free sales are an important component of non-aeronautical revenues for airports and 30 per cent of the non-aero revenue is used to cross subsidies aeronautical charges.” This move may also have a negative impact on upcoming investments, particularly from the likes of Adani Airports, which won contracts for six new airports recently. While several contractors have bid on airport projects across the country, they have also factored in revenue generated from duty free liquor sales. So this move by the Commerce Ministry may lead to the contractors changing their revenue model or reworking the plans altogether.
