Airfares are set to go up as the government has decided to raise airport charges across all non-major airports operated by Airports Authority of India (AAI) by 5% every year beginning April 1.
This is the second time the government has raise airport charges in the last five months.
The passenger service fee, which is charged as a part of air ticket fare, will increase from ₹85 per passenger at present to ₹89 in 2017-18.
The fee will subsequently be increased to ₹93 in 2018-19 and ₹98 per passenger in 2019-20, the Directorate General of Civil Aviation (DGCA) said, following the Civil Aviation Ministry’s decision on March 15.
The raise in fares will be applicable on non-major airports such as Amritsar, Nagpur, Bagdogra, Madurai, Vijayawada, Jammu, Vadadora, among others, which handle an annual traffic of less than 15 lakh.
User development fee
Besides, the user development fee at Amritsar, Udaipur, Trichy and Varanasi airports have been raised from ₹165 at present to ₹173 in 2017-18.
A passenger service fee is charged by the airport operator for providing services such as baggage trolleys, escalators, air conditioning at airport terminals, conveyor belt systems for baggage, wi-fi systems, public address systems and other facilities.
The civil aviation ministry has also increased landing, parking and route navigation charges at all AAI airports by 5% every year to be paid by airlines which may likely pass the cost burden on to the customers. This comes after the Centre had increased the airport charges at AAI airports by about 10%from December-March this financial year.
“The previous tariff revision in December was a one-time hike,” said AAI Chairman Guruprasad Mohapatra. “The airport charges will now be revised by 5% every year,” he said. “Airport fee for non-major airports had not been revised [for the last] nine years. The Airports Economic Regulatory Authority [AERA] fixes the fee for major airports [such as Delhi, Mumbai, Kolkata, Chennai] and for non-major airports, government has the power to fix tariff. The hike is much less than the normal inflation-index,” he said.
Major domestic airlines had opposed the airport fee hike implemented in December as it constituted 10% of their total operational cost.
“It is surprising to note that the concessions offered by AAI to support the RCS [regional connectivity scheme] have resulted in the AAI increasing landing, parking, route navigation and other charges at AAI airports across India, by approximately 10% from Dec 16, 2016.
“This increase in airport charges will further impact airline costs, resulting in increase in airfares,” the Federation of Indian Airlines, which represents IndiGo, SpiceJet, Jet Airways and GoAir, told a Parliamentary panel on February 15.
The Centre has framed a regional connectivity scheme under which airfares will be capped at ₹2,500 for an hour’s flight operated from under-served airports by offering subsidy along with various tax and airport concessions to airlines.
‘Lack of consultation’
The International Air Transport Association (IATA) had criticised the government for lack of consultation on the raise in airport tariff ordered in December.
“Increases in charges without proper consultation has the potential to rapidly erode competitive advantage and potentially jeopardise the growth prospect of the tourism industry and the wider economy of India,” Blair Cowles, Regional Director, Safety and Flight Operations, IATA said.
