Private airport operators send SOS to govt, say operations unsustainable

Airport apex body says aeronautical revenues down 75-80%, cites severe cash crunch; Over 85% of total costs incurred by airport operators are fixed

India’s private airport operators have sought urgent relief from the government to ensure sustaining operations at airports and save jobs.

The Association of Private Airport Operators (APAO) on Wednesday issued a statement saying they “are not generating sufficient cash flows to sustain operations, and meet debt obligations.” Further, their downgraded credit ratings “have made it impossible to take further financing support from financial institutions” and “there is a worry that many (sectoral) jobs will be lost.”

APAO counts operators of Delhi, Mumbai, Hyderabad, Bangalore airport as its members

Airport apex body says aeronautical revenues have reduced by 75-80 per cent. Hit by the Covid-19 pandemic, Indian airport operators are struggling with a severe cash crunch, according to APAO. In a letter written to the Ministry of Civil Aviation (MOCA), the airport apex body, requesting help, said that the aeronautical revenues have reduced by 75-80 per cent whereas, the non-aeronautical revenues have dropped by 85-90 per cent.

Over 85 per cent of the total costs incurred by the airport operators are fixed costs. The association said this issue makes it difficult for the operators to survive.

“Due to Covid-19, airports had to incur additional operating expenses and capex due to re-designing of infrastructure and SOPs for containment of Covid-19 and processing of passengers in a safe and convenient manner,” a statement said.

The association wrote that with the steep drop in air traffic, airports are finding it difficult to sustain their operations. “Airports are not generating sufficient cash flows to sustain operations, and meet debt obligations. Poor cash flows and consequently downgraded credit ratings have made it impossible for airports to take further financing support from financial institutions,” it said.

“With stress on the finances, there is a worry that many of these jobs will be lost,” it feared. APAO pointed out that other countries like Germany, and France are providing support by giving part wages to these workers.

Aviation consultancy firm CAPA reckons passengers will total 80-95 million this year, slightly more than last year’s 52 million passengers.

However, if a devastating third wave materialises, the industry will be knocked out of gear again and final numbers are likely to be closer to 80 million. That’s far short of the 140 million who boarded domestic flights in 2019, the last normal Indian aviation year.

For instance, Delhi Airport, which in pre-Covid days had over 200,000 passengers passing through its portals daily, suddenly found that number had dropped to between 30,000 and 40,000. In mid-May, Delhi airport closed Terminal 3 and announced all flights would take off from Terminal 2. Mumbai’s Chhatrapati Shivaji airport is also operating from one terminal.