The Association of Private Airport Operators (APAO), representing 14 PPP airports including Delhi, Mumbai, Hyderabad, Bengaluru, Mopa, Jaipur, Ahmedabad, and Lucknow, has written to Aviation Secretary Samir Sinha with several demands. This follows the government's April 7 directive asking all 34 major airports to reduce landing and parking charges for airlines by 25% for three months. The move aims to prevent Indian carriers from succumbing to losses caused by increased operating costs due to costly jet fuel and the rupee's decline amid falling air traffic.
APAO's Concerns and Requests
While supporting the government's initiative, APAO argues that the reduction negatively impacts their cash flows due to declining non-aeronautical revenue from lower footfalls, debt repayment obligations, and sustainability concerns. APAO Secretary-General Satyan Nayar's letter to Secretary Sinha states: "...revenue losses in the aviation sector are not limited to airlines alone... Airport operators are contractually obligated to remit revenue share or per passenger fee to AAI... concessionaires operating at airports are seeking waivers citing loss of business..."
APAO has made the following requests:
- Direct AAI to defer payment of revenue share or per passenger fee, equal to the projected reduction in landing and parking charges.
- Direct AERA to hike landing and parking charges immediately after the relief period ends.
- Compensate for losses due to reduced landing and parking charges by increasing User Development Fees (UDF) for international passengers during the same period.
- Direct AAI not to treat such deferment as a default.
- Ensure that the benefit of reduced landing and parking charges is passed on by airlines to passengers.
Passing on Benefits to Passengers
The APAO letter notes: "However, 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 association emphasizes the need for the aviation ministry to ensure airlines pass on the benefits to passengers.
The three-month relief period ends on July 7. APAO has also requested that after this period, landing and parking charges be hiked along with an increase in UDF for international passengers, and a deferment in revenue share with AAI.
