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Govt slammed for airport charges, poor infrastructure

Last updated on: June 11, 2012 11:20 IST

Govt slammed for airport charges, poor infrastructure

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Amitabha Roychowdhury in Beijing

India on Monday came under sharp attack for the recent hike in charges at Delhi airport and major delays in building new airports and strengthening infrastructure, with airlines' body IATA saying this was 'clearly unacceptable' and the government should encourage the aviation sector for overall economic growth.

Observing that India's airport regulator AERA allowed a whopping 346 per cent hike in Delhi airport charges, IATA Director General and CEO Tony Tyler said 'this is clearly unacceptable'.

"The Delhi International Airport Limited has to pay 46 per cent of its revenue to the government. . .This is neither in the interest of the airlines nor of the airport".

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Image: Delhi International Airport.
Photographs: Rajesh Karkera/rediff.com

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Addressing the annual general meeting of the International Air Transport Association in Beijing, Tyler said he would be holding discussions with Indian authorities on this issue soon, expressing hope that 'there might be some common ground' which could be found to protect airlines' and consumers' interests.

"Governments often miss the mark with economic regulation of infrastructure supplies. . . The (airport) regulator in South Africa allowed a 161 per cent increase in airport charges.

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Image: Mumbai International Airport.
Photographs: Rediff Archives

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"This was outdone by the Indian regulator which allowed a 346 per cent increase in Delhi, making it among the world's most expensive airports," he said.

Both the Indian and the South African airport regulators 'failed to protect the public interest', though they followed the prescribed guidelines to allow the massive hike in airport charges and user development fees for passengers.

On aviation infrastructure in India and other parts of the world, Tyler lamented that "Mumbai's much-needed new airport (at Navi Mumbai) will not open as scheduled in 2014 -- construction has not even started".

"Airlines need infrastructure to grow. Just like taxes and regulation, some governments understand and reap the benefits.

"Others don't and the economy suffers the consequences," the IATA chief said.

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Image: Rajiv Gandhi International Airport in Hyderabad.
Photographs: Courtesy, RGIA website

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He said the governments must build regulations that support jobs and economic growth by keeping the cost of connectivity reasonable.

Releasing the global industry outlook, Tyler said the global airline profits were expected to be $3 billion this year, significantly down from $7.9 billion in 2011 and $15.8 billion in 2010.

The major challenges were high jet fuel prices and economic uncertainty, particularly in Europe that was affecting Asia-Pacific region.

"This will be the second year of declining returns since airline profits peaked in 2010," he said, adding that the projected industry profit of $three billion industry would yield a net profit margin of 'just 0.5 per cent'.

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Image: Bengaluru International Airport.
Photographs: Rediff Archives
Tags: Tyler , Europe

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Compared with the previous forecast in March, North American and Latin American carriers are expected to see improved prospects.

The outlook for African carriers is unchanged.

But the outlook for European, Asia-Pacific and Middle Eastern carriers has been downgraded, with European losses now expected to be $1.1 billion, which is nearly double the previously forecast $600 million loss, the report said.

Asia-Pacific airlines are expected to make the largest contribution to industry profits of estimated $2 billion, which is less than half the $4.9 billion profit that the region delivered in 2011.

The slowdown in the Indian and Chinese economies was a factor in the slow growth environment, the IATA report said.


Image: Chhatrapati Shivaji International Airport, Mumbai.
Photographs: Rediff Archives

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