The Airports Economic Regulatory Authority (AERA) will examine differential pricing issues of aviation turbine fuel at the two Delhi airport terminals. AERA chairman Yashwant Bhave said the regulator is in the process of finalising a consultation paper on the charges that can be imposed by an airport to supply fuel through hydrants.
Bhave's announcement comes in the wake of concerns raised by Jet Airways and Kingfisher Airlines over higher costs of ATF at the T3 terminal. The two airlines had said that they wanted to shift operations from terminal 3 (T3) back to terminal 1D (T1D), as they fear losing on the competitive edge to rival low-cost carriers. Airlines operating from T3 have to pay about Rs 1,000 more per kilo litre for ATF because the fuel is dispensed through hydrants instead of a bowser (tanker).
“The charge has to be related to the costs (of providing infrastructure),” Bhave said, adding AERA will determine the rates. He hinted, that in principle, there was nothing wrong in airports charging users for the use of infrastructure.
The anomaly over ATF pricing is proving to be a bone of contention between the airlines and Delhi International Airport Limited. Both Jet and Kingfisher Airlines had written to the civil aviation ministry in this regard. Calls and text messages from Business Standard did not elicit any response from Civil Aviation Secretary Naseem Zaidi.
Rising fuel prices have been denting airlines' profitability and high cost of operations from T3 is being seen as the reason behind airlines expressing their wish to get back to T1used by domestic low-cost carriers.
Delhi airport sources admitted that Rs 987 is being charged per kilo litre by Delhi Airport Fuel Farm Private Limited which has developed a fuel hydrant system in the apron area at T3.
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DIAL along with Indian Oil and Hindustan Petroleum are stake holders in the company.
“There are several costs with fuelling being the major cost. Common User Terminal Equipment charges are higher. They charge for the carts that transport the elderly from the gates to the check-in counters. It costs us Rs 6 crore a year just for this service. Office costs are also higher. We simply cannot bear these additional costs and compete effectively with low-cost carriers out of Delhi,” an airline source said.
Delhi airport sources admitted that Rs 987 is being charged per kilo litre by Delhi Airport Fuel Farm Private Limited which has developed a fuel hydrant system in the apron area at T3. DIAL along with Indian Oil and Hindustan Petroleum are stake holders in the company.
“It may have increased the cost. But this system has also reduced the turn around time of flights by 20 minutes. Earlier fuel had to be carried in bowsers (tankers) but now it is supplied by hydrants,” a DIAL official said. Any move to shift airlines back to T1 will send airport planning for a toss. “We are planning terminal use space and allocated counters to low-cost carriers as Jet and Kingfisher had moved out. Now they again want to return to T1. This will put strain.”
The issue of rising costs is a cause for concern to Jet because it has the largest number of domestic services out of the Delhi airport. Jet Airways along with its subsidiary Jetlite operates 74 flights daily. While announcing its migration from T1 to T3, Jet Airways had said it will develop T3 as one of its primary hubs connecting “India to the World” — 29 domestic destinations and over ten international destinations from Delhi.
“We have no issues with airlines operating out of any terminal. We will look at the ministry direction and convenience of airlines for their operations,” DIAL said in an email response.
"DIAL does not have any difference in tariffs between two terminals and thre is no different treatment for any players. DIAL charges a uniform fuel throughput charge of Rs 561/kl and any other difference in fuel charges is due to infrastructure costs which are controlled by the oil companies. Charges levied on fuel are part of aero tariffs and part of review being currently undertaken by the Airport Economic Regulatory Authority.”