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Government Mandates Fee Cut, Operators Protest Lack of Consultation
India's Airports Economic Regulatory Authority (AERA) has mandated a 25% cut in landing and parking fees for domestic flights at major airports, effective for three months. Airport operators are protesting this move, arguing the abrupt change, implemented without prior consultation, jeopardizes the regulatory stability built over 16 years.
Operators Cite Cash Flow Woes and Debt Repayment Fears
Operators warn that the 25% fee reduction will severely affect immediate cash flows and the ability to repay debts. They highlight that essential airport operating costs—covering infrastructure, service, and safety—are fixed and cannot be reduced. Compounding the problem, lost revenue from non-aeronautical sources cannot be recovered. This mismatch between reduced income and ongoing expenses puts financial stability and debt repayment at risk.
Operators Propose Waivers, Tax Cuts, and Fee Adjustments
The Airport Operators Association of India (APAO) has proposed several solutions in a letter to MoCA. They are asking the Airports Authority of India (AAI) to defer revenue share or per-passenger fees equivalent to the charge cut, without interest or penalties. The association also suggests increasing User Development Fees (UDF) for international passengers to offset losses and ensure future tariffs account for shortfalls. Additionally, operators are urging a reduction in Value Added Tax (VAT) on Aviation Turbine Fuel (ATF) to 5% or less, seeking cooperation from state governments. Maintaining financial health is crucial, operators emphasized, to support vital infrastructure projects largely financed by public sector banks.