Talking to a select group of reporters here, International Air Transport Association (IATA) director general and chief executive Tony Tyler said, “My suggestion is that the Government should carry out a rigorous cost-benefit analysis before taking a decision on these four airports Authority-run airports in Chennai, Kolkata, Ahmedabad and Jaipur.”
“Whatever be the decision, it should not lead to repeat of what has happened in Delhi, Mumbai and Bangalore where airport user fees have shot over the roof,” Tyler added. Opposing outright privatisation of these four airports, Tyler argued that “if attracting investment is the purpose of selling out these airports to private parties, then there is no logic in that as the AAI has already developed the infrastructure in these facilities.
“But if the Government is looking at increasing operational efficiencies and not just its revenue maximisation, then it should look at giving away a management contract to a private sector hand and not go ahead with an outright sale so that there is no arbitrary jump in user charges as happened in the privately run facilities in Delhi, Mumbai and Bangalore,” he said.
In the past many years, beginning with the second term of the past UPA regime, the aviation ministry has been trying to privatise the Chennai, Kolkata, Ahmedabad and Jaipur airports, even as the AAI had put in thousands of crores in modernising them. The AAI and ATC unions have been opposing the move tooth and nail, though. .
Tyler called for “single till” method to calculate revenue from various airport activities and the resultant user fees over the present system of ‘hybrid till’ model, which calculate aeronautical and non-aeronautical revenues separately so that all the stakeholders benefit and not just the airport operator. Tyler said both aeronautical and commercial activities are taken into consideration to determine the level of airport charges. By contrast, only aeronautical activities are taken into consideration under the dual till principle and the hybrid is the worst.
Following the new terminals at the Delhi (GMR Group), and Mumbai and Bangalore airports (GVK Group), the user development fees for both flyers and airlines have jumped close to 400 per cent in Delhi and over 300 per cent in Mumbai making the two of the most costly airports in the Asia. In August 2012, the government allowed the GMR-run Delhi Airport to hike user charges (aeronautical fees) by a whopping 346 per cent after the Airports Economic Regulatory Authority (AERA) suggested to do so against GMR demand for a 774 per cent hike in the same, forcing some airlines like Air Asia to stop operating from the national capital and forcing them to move the Delhi High Court challenging the same.
Aeronautical tariffs include parking, landing and navigation fees for airlines, besides passenger levies on fares. Though in February, AERA had proposed a sharp 80 per cent reduction in the airport charges at the Indira Gandhi International Airport, nothing has happened so far.
The GMR Group, which has invested around Rs 12,500 crore to develop the swanky new terminals including the T-3, has already has sought a directive from the Airports Economic Regulatory Authority Appellate Tribunal to put on hold the proposed reduction in user charges for the five-year period starting April. It can be noted an airline pays Rs 2,97,543 for landing a widebody Boeing B777 aircraft at the Delhi airport, the tariff in Hong Kong airport is Rs 1,86,769 and at Dubai it is a much lower Rs 85,023.
Kuala Lumpur airport charges $203 to handle a small Airbus A-320 aircraft for a three-hour turnaround while domestic airports charge four times more at $1,060. In March 2014, Mumbai airport steeply hiked aeronautical charges by 300 per cent and in June 2014, airport tariff regulator AERA by Rs 1,368 and Rs 342 per international and domestic passenger respectively as user development fee and other charges for Bangalore airport, while the aeronautical charges were hiked by 100 per cent.