Airfares to soar as AAI wants charges hiked

NEW DELHI: Flying is likely to become costlier this year as the Airports Authority of India is planning to demand that landing and parking charges for airlines be "at least" doubled. This comes close on the heels of the 774% hike sought by the Delhi International Airport Pvt Ltd (DIAL), with the regulator approving a 334% increase from April. Mumbai airport is also learnt to be in the process of demanding an increase in charges.

Once the AAI demand is approved by the Airport Economic Regulatory Authority (AERA), the enhanced charges will be passed on to passengers in form of higher fares. This will be in addition to new charges at places like Delhi and the general increase airlines are contemplating to cover their massive losses.

While airlines are opposing any hike in airport charges and asking operators to increase cash flow by lower tariffs to get more footfalls, airports have also begun citing massive losses and non-payment of dues from nearly bankrupt airlines.


"Airlines are in a very bad shape with Air India and Kingfisher running up huge past dues that they are unable to pay. We were avoiding seeking a hike in airport charges at this juncture, but now it has become unavoidable for us too as AAI has been augmenting infrastructure in form of new terminals and runways across the country. We need at least a 200% hike and will move AERA soon," said a senior AAI official.

Airlines and other industry stakeholders are opposing the hike in airport charges. They are also opposing the steep new levy called user development fee that DIAL wants to charge from passengers from April. Some airlines have announced withdrawal of flights from Delhi and others threaten to do so, as an over threefold hike has already been approved for IGI Airport from April.

At a recent meet to discuss the proposed hike at Delhi airport, the International Air Transport Association ( IATA) pointed out that IGI would have the highest (user) charges in the world if the 334% hike comes into effect. It called for a review of the agreement under which DIAL shares 46% of its revenue with AAI.

Both foreign airlines and desi ones like Air India, IndiGo and SpiceJet opposed the hike, with SpiceJet's senior vice-president Kamal Hingorani claiming that such a move could even lead to "closure of some airlines".

Airport developers, on their part, point out that landing and parking charges have been unchanged for a decade, barring a 10% hike in 2009. "Airport charges are archaic given the way infrastructure has been created. They have not even kept pace with inflation. The hike we have proposed will lead to a maximum of half-per cent increase in cost incurred by airlines on airports as proportion of their total expenditure," a DIAL official had said recently.