Saturday, August 8, 2009

Study says airport fees in India among the lowest in world

Even as airlines hit out at private airport developers against the "exorbitant" charges being collecting from carriers, the Association of Private Airports Operators (APAO) — comprising private airport operators of India — has come up with a study that puts operating costs at major Indian airports as among the lowest when compared to other major airports around the world.

"The association wishes to clarify the misconception that airport charges in India are amongst the highest in the world," it said. In a survey conducted in 2008 by Jacob Consultancy, which specialises in aviation consultancy, Mumbai airport was ranked 50th in a sample of 50 worldwide representative airports. "This indicates that charges at Mumbai (Delhi airport has similar charges) were amongst the lowest," said APAO secretary general K L Kanthan.

Mumbai's charges are 16 per cent of what Toronto — which charges the maximum fee — collects from airlines. However, airlines do not buy the argument. "There are three components to airport charges. The passenger service fee (PSF), the navigation charges and finally the airport charges. Taken together, it forms a substantial chunk of our operating costs," said a senior official from Air India.

The APAO has also argued that airport charges in India were increased by 10 per cent only once after eight years against the aggregate inflation of 48 per cent, based on average annual cost inflation of 5 per cent. "The fact is that airport charges in India constitute only about 3.25 per cent to 3.5 per cent of total operating cost of airlines as compared to ATF (aviation turbine fuel) which constitutes 40 per cent of the costs."

However, according to Centre for Asia Pacific Aviation (CAPA), while there has to be a recovery model in the billions of dollars being invested in these airports, the introduction of airport development fees (ADF) and user development fees (UDF) came at a very wrong time.

"Airlines in India should understand that such investments need to be absorbed. But from their point of view these new charges came at a very wrong time when the industry was in bad shape and the extra costs passed on to passengers could not be absorbed by them”.

"Unlike airlines, which have the flexibility of focusing on profitable routes and reducing capacity, airports have to maintain the same level of service and facilities irrespective of numbers of passengers. Investment in airport capacity needs to be done with a 5-10 year future horizon to take care of future growth in traffic," the APAO statement said.

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