Airport regulatory support sought after AERA cuts landing and parking charges

Private airport operators asked the government for urgent regulatory support after a temporary cut in airport charges. The operators said the move reduced income and strained cash flow. The request followed a 25 per cent cut in landing and parking charges for domestic flights. The reduction applied across major airports for three months.

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The Airport Economic Regulatory Authority, AERA, announced the charge cut on April 7. The measure aimed to help domestic airlines facing pressure linked to the West Asia conflict. Higher costs, including costlier jet fuel, added to airline stress. Airport operators said the relief shifted financial strain towards airports.

Landing and parking charges: Airport operators seek policy relief

Against this backdrop, the Association of Private Airport Operators, APAO, wrote to the civil aviation ministry earlier this week. APAO warned the reduced charges could hit cash flows and weaken debt repayments. APAO also flagged risks to day-to-day operations. APAO represents 14 airport operators, including Delhi, Bangalore, Cochin, Hyderabad and Mumbai.

APAO called AERA’s action unfair in its design and effect. The association described AERAs decision as arbitrary and a differentiated, airport-specific approach would better align with the principles of cost causation and equity. APAO said some airports depended more on international traffic. APAO said those airports faced bigger impacts from lower volumes.

APAO said airports were dealing with traffic drops, revenue losses, and higher costs. The association added that operating risks also rose during such periods. It also pointed to losses beyond aeronautical fees. Besides, the Airport operators also bear significant losses of Non-Aeronautical Revenue, which is lost forever, and there is no way to recover them, the letter, written earlier this week, said.

User development fee: APAO proposes UDF rise for international passengers

APAO urged the ministry to direct AERA to restore higher charges after the relief window. APAO also sought a true-up of under-recovery from the aggregate revenue requirement. It said the shortfall should not remain unresolved. APAO also suggested a faster offset during the same period.

The association said lost landing and parking income could be balanced through another route. The loss due to landing and parking can be compensated by an increase in UDF for international passengers in the same period. This will avoid true-up at a later stage, it said. APAO linked this step to limiting later adjustments.

Landing and parking charges: Payment relief sought from AAI

APAO also raised the issue of payments to Airports Authority of India, AAI. It said airport operators must remit revenue share or per passenger fees under concession agreements. APAO asked the ministry to tell AAI to defer payments. The deferral should match the projected revenue loss for three months.

APAO said the deferred amount should not attract interest or penalties. It argued this would help protect liquidity during the charge reduction period. The association said this support would reduce immediate stress on operators. Members of APAO include GMR Group and Adani Group.

Jet fuel VAT: Airports and airlines cite wider cost pressures

The airport operators also discussed how passengers may not see lower fares. APAO said airlines worked in a mostly unregulated pricing space. It said there was no enforceable mechanism to ensure that reduced charges translate into lower airfares. APAO warned the public benefit might fall short while airports absorb losses.

Earlier this week, the Federation of Indian Airlines, FIA, made a separate representation to the government. FIA represents IndiGo, Air India and SpiceJet. FIA said the airline sector was under extreme stress and near a shutdown. The group sought jet fuel pricing changes and financial support.

APAO also suggested tax action on aviation fuel to ease pressure across the sector. It said the ministry should ask state governments to cut value-added tax on jet fuel. The association recommended a VAT rate of 5 per cent. APAO’s letter set out these steps as immediate measures during the relief period.

With inputs from PTI