Indian carriers, which are still reeling under high jet fuel (ATF) prices, are now seeing red over airports increasing the space rental fees by 50 to 450 per cent. Airport charges account for 12-15 per cent of an airline’s costs.
The Chennai airport, which is operated by the Airports Authority of India (AAI), increased its rentals for airside space used for storage of aircraft equipment by over 450 per cent.
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Chennai-based cargo carrier Blue Dart has already been affected by this steep increase. The Coimbatore and Varanasi airports, too, increased rates by 51 - 172 per cent, respectively. The charges levied by these airports would now range between Rs 500-2,500 per square meter.
The matter is bound to figure in the meeting of the Federation of Indian Airlines (FIA), slated to be held next week. "The airport charges will be one of the issues to be taken up at the FIA meeting," Bruce Ashby, CEO of Delhi-based low-cost carrier IndiGo, said.
“Usually these rates increase by around 7 per cent every year, but this arbitrary increase of 450 per cent is unacceptable. Though rentals do not account for a huge chunk of the airport costs for an airline, any arbitrary increase in costs right now is bad," a SpiceJet executive said.
However, an AAI executive termed the revision in rates are normal. The rates of some airports, which had not been revised for some time, have seen a greater increase, he said.
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According to airline executives, the GMR-operated greenfield Hyderabad airport has also more than doubled rates for space used inside the terminal compared to last year.
Executives of GMR Hyderabad International Airport, however, denied that there had been any increase in rates.
Earlier this year, airlines like SpiceJet stopped operations to Kochi because of the high airport charges levied by the airport.
Airline executives, however, said that this "arbitrary" increase in rentals will not lead to a cut in flights. "Airlines have already cut around 50 daily flights to Hyderabad and Bangalore. Cutting flights to an airport like Chennai would leave the southern region very underserviced," an airline executive said.
Meanwhile, the Hyderabad airport has already made a case for a higher levy of user development fees on domestic passengers than the charge of around Rs 600 per domestic passenger that was proposed earlier.
In its accounts recently submitted to the civil aviation ministry, the company showed that due to the recent downturn in the aviation industry, the total number of passengers for the year 2008-09 would fall 6 per cent below the previous estimates and the gap between costs and revenues would increase by 15 per cent.