The Association of Private Airport Operators (APAO) on Friday approached the government with a request to allow levying of a nominal passenger facilitation charge as part of airline fares to cover increased operating expenses being incurred by the operators in wake of the COVID-19 outbreak and fall in passenger volumes.
In a letter to the civil aviation secretary on Friday, APAO also sought provisioning of an airport operator alleviation package by Airports Economic Regulatory Authority (AERA) to facilitate the growing operational expenses, released in the next control period of applicable airport operators.
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Citing Airports Council International (ACI) estimates, APAO said that the Asia-Pacific region is suffering the highest impact, with passenger traffic volumes down 24 percent for the first quart er of 2020, compared to forecasted traffic levels without COVID-19. Against this gloomy background of sharp declines in traffic and passenger throughput, airports' aeronautical revenues and non-aeronautical revenues are rendering similar declines.
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The ACI World Airport Traffic Forecasts 2019-2040 projects revenue loss owing to COVID-19 to the tunes of US $3 billion. “While cancellation of flights by various international and domestic carriers (a measure by airlines to save operational expense in response to muted passenger demand) has impacted the air traffic management (ATM)-related revenues for airports, reduced number of passengers has impacted the passenger related revenues,” APAO secretary general Satyan Nayar said.
Mr. Nayar said that reduced passengers at airports have adversely impacted the non-aero revenues due to less sales at food and beverage (F&B) and retail outlets. “Non-aero concessionaires have already started asking for reduced revenue share or mininum monthy guarantee which in turn will impact airport operators' revenues,” he said.
Besides, APAO cited that ensuring compliance with government advisories on screening of passengers has required airports to significantly beef up its manpower deployment at airports as well as make expenditure on various items like masks, sanitizers and floor cleaners.
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“These issues are impacting the airport adversely with no offset or compensatory stream available to them and are severely impacting the cash flows for the airport operators,” Mr. Nayar said pointing out that this is unlike airlines which have got one major compensatory stream in terms of significantly reduced (more than 50%) crude oil prices, which make up almost 40 percent of their operational expense.
APAO in its appeal to the government for relief said that it was also pertinent to mention that while airlines can choose to cancel flights or relocate their aircraft to other markets to reduce operating costs, airports face immediate cash flow pressures with limited ability to reduce fixed costs and few resources to fund capacity expansion efforts for longer-term future growth.
“For privately-held airports, the situation is even worse as they do not benefit from relief measure but are obliged to continue paying concession fees to the regulator,” the APAO letter said.
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