Air Navigation Service (ANS) charges or fees for radar and air traffic control services have been hiked by 3.5-4 per cent bringing relief to Airport Authority of India (AAI). Airlines will have to absorb the higher cost as there is no room for increasing fares at present.
On Wednesday, Director General of Civil Aviation Arun Kumar notified the decision after the government approved AAI's long pending demand for an increase in the levy. The navigation charges collected at present were approved in early 2000. A hike in charges in 2017 was rolled back because of opposition from airlines.
ANS charges contributed around Rs 3,500 crore, nearly a quarter of AAI's revenue in FY2020. However, these account for 3-4 per cent of operating expenses of airlines in India. A senior aviation industry executive said airlines will have to absorb the ANS rate hike as demand for travel remains subdued. Only lowest priced tickets are being sold and there is no room for an increase in fares, he added.
"The sudden increase in India’s air navigation services (ANS) charges is disappointing, especially since it is being done with just a day’s notice and when the global aviation industry is facing the biggest crisis in its history. Furthermore, implementing a differential increase in charges for domestic and international airlines goes against International Civil Aviation Organisation's principles that call for charges to be 'equitable' and 'non-discriminatory', said an International Air Transport Association (IATA) spokesperson.
Senior executives in AAI have defended the hike, saying it is nominal. The rate hike will be done in two phases The first phase of rate hike will be for 5years till 2025 and rates will be hiked by another 3.5-4 per cent for next five year period.
The AAI is itself facing a financial crisis and is projected to report its first annual loss in FY2021. The increase in charges will help the authority recover costs of the investments made in last few years, officials said.