Airport charges at Delhi, Mumbai may go up

A proposal for a big hike in landing, parking, navigation and other charges at the Delhi and Mumbai airports is being considered by the Airports Economic Regulatory Authority (AERA) and a decision is likely by early next year.

The AERA is seeking the views of airport users, including airlines, on the multi-year tariff proposals of Delhi International Airport Limited (DIAL) and Mumbai International Airport Limited (MIAL) to hike airport charges by 500-600 per cent, official sources said here.

If approved, flying out of the IGI airport would become costlier as the airlines, on whom this additional burden would be imposed, would onpass these costs to the passengers. A decision on the proposal to hike airport charges, which was made by DIAL and MIAL a few months ago, is likely to be taken by the AERA in another two-three months, they said.

The hike in airport charges has been overdue since 2001 but it would depend on the Civil Aviation Ministry's policies, AERA decision and the views of key stakeholders including the airlines and passenger associations, whose views were being sought, the sources said.

While airport charges like landing, parking and air navigation fees levied by the airport operators have not been revised since 2001, the GMR and GVK led airport operators also say that Supreme Court's directive not to collect development fee from passengers has also imposed a major financial burden.

The apex court has left it to the AERA to decide on the development fee issue also.

The GMR-led DIAL, in which Airports Authority of India has 26 per cent stake, has invested a total of Rs12,718 crore so far to upgrade and modernise IGI Airport and is seeking a 24 per cent return on its equity.

Latest figures show that DIAL incurred operating losses of Rs200 crore in the first quarter of the current financial year and is estimated to suffer a total loss of Rs800 crore this fiscal.

Delhi airport officials feel that DIAL was in a "very tight position" as the revenues were "lop-sidedly low" due to the decade-old tariff structure and its capital expenditure has risen considerably with the modernisation of the airport, hitting its profitability hard.

The considerable rise in passenger traffic and inflation has also led to burgeoning costs which was taking a toll on DIAL's financial bottomline, these officials said.

Currently, an airline has to pay about Rs12,000 for each landing of a jet plane like Airbus A-320 in case of domestic flights. In case of an international flight of the same aircraft type, the rate is about Rs20,000. A wide-bodied plane coming from a foreign destination could be charged up to Rs100,000 depending on its weight.

For the Delhi airport developer, the project cost was earlier estimated to be about Rs9,800 crore which has risen to Rs12,718 crore.

Sources in the airline industry, while acknowledging the rising costs as also the need to increase airport tariff, feel that the hike should not be a "massive" one.

Noting that the industry was already in deep red, they said the Indian carriers, some of which owe a lot of money to DIAL and MIAL, would not be in a position to pay in case of a "massive hike".

Airlines' global body IATA, which has been opposing hike in airport tariff across the world, has been suggesting that the airport and air navigation charges be kept at the current levels for some time till the aviation industry fully recovered from red.