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Cost of operations at Mumbai airport are set to rise with Mumbai International Airport Ltd (MIAL) fixing higher rent in upcoming international terminal and introducing a levy on packed food items sold on board low cost airlines.
Mumbai airport handled over 30 million passengers last year and is the second busiest airport after Delhi
The 4,39,000 sq metre, the four-level new terminal called T2 at Sahar is set to open in December-January and will initially handle only international flights.
MIAL has signed fresh agreements with airlines and ground handling companies for office space at the terminal and has revised rentals from about Rs 2000 per sq metre to Rs 2800 per sq metre.
In addition the airlines have to pay Rs 25,000 per sq metre in deposit and a fixed user charge for telephone and internet connections. Moreover MIAL has proposed a 7.5% revision in rent from next April and this is being opposed by airlines.
Airport Regulatory Authority of India fixes landing and parking charges and user development fees and regulates charges which can be levied by cargo and ground handling companies. However airports do not require regulatory permission to fix rent.
"The new terminal will open in December-January. It will not be fair to revise the rates within three months. We believe that MIAL will reconsider this,'' an airline executive said. An official from an international airline said the increase in rates will be impact route profitability.
Sources said airlines are opting for smaller offices in the new terminal building. Cambatta Aviation Pvt Ltd, a ground handling company has shifted a part of its office outside the terminal building because of higher costs and sources said Etihad Airways is planning a similar move. Etihad did not respond to email query.
Domestic low cost airlines are also opposing a move to impose 13% levy on packaged food items which are sold on board the flights. The low cost airlines source meals from inflight kitchens and purchase packed food stuff like biscuits, bottled water, juices and other items from other vendors.
The packaged items are stored in inflight kitchens and transported in the catering trucks along with other meals. The airlines pay inflight kitchens for the meals and handling charges for storage and transport of other packed items.
Inflight kitcens pay a royalty or a levy on their turnover to the airport but from July onwards MIAL has begun imposing levy directly on airlines for the packaged food items which are procured from outside vendors. Airline representatives raised the issue of levy with civil aviation secretary K N Srivastava last week.
"No other airport imposes such a levy and will follow Mumbai. We will begin uplifting packaged items from airports but can pose logistical issues,'' an airline executive said.
MIAL did not respond to email query on the issue.
International Air Transport Association spokesperson Albert Tjoeng said in a statement, “The steep hike in airport charges at Mumbai airport earlier this year had already put a significant financial strain on airline operations. The airport should not impose further cost burden through increases in non-regulated charges that have a direct impact on airlines’ operating costs. The outcome of such a move would not be favorable to all parties concerned - the airport, the airlines or the passengers - as traffic growth at the airport would be adversely affected.”
