Sky-high airport fees choking domestic aviation: IATA chief

Poor infrastructure and high taxes work as a deterrent to development of aviation sector

Increasingly expensive airports and poor infrastructure are acting as deterrents to the growth of the civil aviation sector in the country, global airlines body IATA has said.

"India's airports are becoming increasingly expensive. We have seen a 346% increase in charges at Delhi, 164% increase in aeronautical charges in Mumbai, 219% in Kolkata, and a 269% hike in Chennai. These are huge increases," IATA director general and chief executive Tony Tyler told PTI at his Geneva headquarters recently.

"But we have had some victories. They have rolled back some charges in Delhi," the International Air Transport Association (IATA) chief said.

Stating that the poor infrastructure and high taxes work as a deterrent to the development of the aviation sector, he said aviation is a huge economic enabler of growth.

"Look at Mumbai, which is probably the most important commercial centre of the country. Frankly, its airport is inadequate. We have been talking about the Navi Mumbai airport for years, but where is the progress on that?," he asked.

High taxes on the jet fuel, which goes up as high as 40% in some states, coupled with higher airport charges in the form of user-development and airport development fees jack up air fares. These have had a negative impact on the passenger demand in the country.

Pointing out that sectoral regulator Airports Economic Regulatory Authority (AERA) has been doing a good job, he said, "I think, within the scope of its authority, the AERA has been as tough as it could be. But the system of regulation leaves something to be desired."

He also flayed the government for taking away a larger revenue pie from private airport operators and blamed it as one of the reasons for higher airport charges.

"The share of the government revenue is ridiculously high. I discussed this with the regulator. You cannot blame the airports to make money when the government takes away 46% from the GMR-run Delhi airport," he said.

The Delhi and Mumbai airports were handed over to GMR and GVK, respectively on a 30-year lease in 2006 with an option of extending it by another 30 years.

Under the privatisation agreement, the state-owned Airports Authority gets a revenue share of 45.99% from Delhi and 38.7% from the Mumbai operators on their gross revenue, even though the government agency owns only 26% in these two airports.

Stating that it makes difficult for the private airport operators to generate a return for the investors, Tyler said, "So he is going to have to increase charges wherever he can and as result it is the end-user, the passenger, who pays for it."

However, he said the entry of new players into the aviation space--AirAsia, Singapre Airlines and Etihad- reflects the confidence of investors in the long-term growth of the aviation sector.

Tyler, however, said Singapore Airlines-Tata joint venture, which will cater to the full service space, may pose competition to the other two players in the segment-Air India and Jet in which the gulf carrier Etihad owns 24%.