India continues to remain a high-cost environment for airlines to operate in and it is critical to empower the Airports Economic Regulatory Authority (AERA) further to safeguard the interest of passengers, said Philip Goh, Regional Vice President for the Asia Pacific of global airlines body IATA.
AERA decides
AERA decides what tariffs — such as base airport management, landing charges, parking charges, and passenger service fee — can major Indian airports charge an airline or a tourist for a particular time after analyzing the airports’ expenditure and revenue forecasts for that time.
Goh told PTI in a statement last week
Goh told PTI in a statement last week, “Over the past year, with the third control time tariff reviews for India’s major airports, AERA has proved its effectiveness as an independent regulator.”
“At a time when the government is planning on a big thrust on the monetization of airport assets under its National Monetisation Pipeline, AERA must be empowered further to safeguard the consumer interest,” he added.
Since the starting of the pandemic in February last year, AERA has refused the requirements of operators of major airports such as Delhi and Mumbai for a major increase in tariffs for the third control period, which started in April 2019 and ends in March 2024.
AERA had in December 2020 rejected the Delhi airport
For example, AERA had in December 2020 rejected the Delhi airport operator DIAL’s demand to increase base airport charges by 424 percent.
Mumbai airport
Similarly, AERA had in February 2021 rejected Mumbai airport operator MIAL’s demand to impose an ad-hoc user development fee (UDF) of Rs 200 on domestic outbound tourists and Rs 500 on the international outbound traveler.
If the demand for ad-hoc UDF at the Mumbai airport was permitted, it would be unfair and an additional burden to passengers who should instead be getting the benefit of “reduced tariff” as they have “already overpaid in the prior years”, the AERA order had told.
Last month, AERA had issued an order stating that the UDF at the Bengaluru airport will remain unchanged till March 2022 and will be increased every financial year from April 2022 to March 2025.
Bengaluru airport
In reaction, Bengaluru airport operator BIAL had revealed its disappointment stating that the AERA order was likely to be “seriously inadequate to meet our cash flow requirements and will also pose a challenge when it comes to reaching our operational costs”.
Last week, Goh told PTI that India “is and continues” to be a high-cost environment for airlines to operate in.
That’s why the role of AERA as the independent airport economic regulator is critical, otherwise, airports will be able to increase their charges unchallenged, and without the required justifications, transparency, and oversight, he added.
“But airport charges are only a part of the problem contributing to the high-cost environment in India.
While we welcome the abolishment of the fuel throughput fee in 2020, the MOCA (Ministry of Civil Aviation) must follow through on it and do away with the rent-seeking approach evinced in India’s airport royalties,” Goh mentioned.
Similarly, India’s Aviation Security Fee (ASF) — which was introduced in July 2019 to replace the Passenger Service Fee (Security Component) — has been increased for international passengers by 370 percent and domestic passengers by 54 percent in a short span of over two years, without much transparency and consultation, he noted.
The increases in ASF were decided and announced by the MOCA. Airlines are gradually emerging from the deepest crisis to hit the aviation industry, he said.
“They should not be dragged down further with unreasonable cost burdens that would weigh on their recovery,” he added.
IATA’s Director General Willie Walsh had on October 3 in Boston, the US harshly criticized the airports’ demands to increase their tariffs when the entire global aviation sector has been incurring massive financial losses due to the COVID-19 pandemic.
“Reducing costs-not increasing charges-must be at the top of everyone’s agenda. But total confirmed airport and ANSP (air navigation service provider) charges increases announced in 2021 have already reached USD 2.3 billion.
It’s outrageous. And, if unchecked, it will get worse. That’s why I am ringing the alarm. This must stop,” he had said.
Everyone wanted to put COVID-19 after them but placing the financial burden of a crisis of apocalyptic proportions on the back of airlines — just because you can — is a commercial strategy that only a monopoly supplier could dream up, he had said in his speech at an IATA event.
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Thank you
Source: Economic Time
