Private airport operators look to levy fee to cover coronavirus losses

Say infrastructure they set up is a fixed asset and not flexible to respond to sudden dip in business

Private airport operators have sought government permission to levy an extra charge on flyers to compensate for losses incurred because of reduced footfall and air traffic as a result of the coronavirus outbreak. This has angered airlines who termed the demands “self-serving” at a time of crisis.

“Revenue streams of airports have been impacted adversely. To ensure sustainability of airport operators, we propose to levy a nominal facilitation charge as part of airline fares to cover the increased operating cost,” Association of Private Operators said in a communication to the Pardeep Singh Kharola, secretary of Ministry of Civil Aviation. Private airport operators levy charges on flyers in the form of user development fees, passenger service fees and development fees.

On Wednesday the Centre virtually sealed borders cancelling all existing visas till April 15. Since February, foreign carriers operating to India have cancelled about 492 flights. Indian carriers have cancelled 96 international flights. 

 

 

At Bengaluru airport, international traffic dropped 20 per cent in February and almost by 50 per cent so far in March. 
 

Where the airport would normally have 14,000-15,000 international passengers a day, it is seeing 6,000-7,000 passengers, a spokesperson said.

Executives of private airports say their revenue stream is under severe pressure because of the revenue sharing arrangement they have with the government. According to the agreements signed in 2006, GMR-group-owned Delhi Airport and GVK-group-owned Mumbai Airport pay 46 per cent and 38.7 per cent of their annual revenue to the Airport Authority of India (AAI). An executive of a private airport operator explained that the revenue has to be paid one quarter in advance. “So we have already paid the government for Q1FY21 according to the projected business plan we had at the beginning of the year. Suddenly things took a downturn. Aircraft movement is reducing so is passenger footfall, which will make the plan redundant,” he said.

According to a second executive, many trade partners are seeing a drop in footfall. “They will certainly default for at least the next two quarters, which impact the overall revenue of airports.”