Pvt airports want fliers to pay more as Coronavirus hurts their profits

Delhi, Mumbai, Hyderabad, Bangalore airports say that infrastructure they set up is a fixed asset and not flexible to respond to a sudden loss in business

Private airport operators of India have sought the government's permission to levy extra charge on fliers, citing losses incurred due to reduced passenger footfall and aircraft movement.

“Revenue streams of airports have been impacted adversely against the gloomy background of sharp declines in traffic and passenger throughput. To address the growing severity of this issue and 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 at 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 government virtually sealed off borders saying that all existing visas had been cancelled till April 15 to rein in the spread of coronavirus, which is spreading exponentially across the globe. The World Health Organisation too, has classified it as a global pandemic. The move has forced people to en masse cancel travel plans as airlines cut flights drastically.

Since February, foreign carriers operating to India have cancelled about 492 flights till March-end. Indian carriers have cancelled 96 international flights. This number is set to increase further after Wednesday’s order.

At Bengaluru airport, international traffic has dropped by 20 per cent from normal levels in February and almost by 50 per cent from normal levels in March ‘20. "While the airprot would normally have international passengers in the region of 14,000-15,000 per day, we are seeing approximately 6,000-7,000 daily international passengers,” an airport spokesperson said.

Executives of private airports say that due to the revenue sharing arrangement they have with the government their revenue stream is under severe pressure. According to the agreements signed with the government during privatisation process in 2006, India’s two largest airports, the GMR group-owned Delhi Airport and GVK group-owned Mumbai Airport pay 46 and 38.7 per cent of their annual revenue to government-owned Airport Authority of India (AAI).

An executive of a private airport operator explained that the revenue has to be paid a quarter in advance according to the projected business plan submitted by the airports to the government.

“So we have already paid the government for Q1 FY 21 according to the projected business plan we had in the beginning of the year. But suddenly things took a downturn and we are seeing a decline everyday. Aircraft movements are reducing so are passenger footfall which will make the submitted business plan redundant,” he said.

According to another executive, multiple of their trade partners including the food & beverage stores, retail outlets and shopping outlets are seeing a drop in footfall. “They will certainly default for at least the next two quarters which in turn will materially impact the overall revenue of airport. So to say in plainly, both aero and non-aero charges are getting impacted and unlike the airlines, airport’s infrastructure are of fixed nature and not very flexible to respond to such fluctuations,” the executive said.