Airlines lambast DIAL plea for hike in tariff

New Delhi: Indian and foreign airlines have slammed the Delhi Airport operator`s demand for an eight-fold hike in tariff, saying it would make the charges here even costlier than those levied at Singapore, Bangkok, Dubai and Hong Kong put together.

While the Delhi International Airport Limited (DIAL) has justified its proposal of a 774 per cent hike saying the aeronautical tariff would actually increase by 100-150 per cent, the carriers have said if the proposed hike is approved by the Airports Economic Regulatory Authority (AERA), it would make Delhi airport the costliest "in Asia, if not the world".

The airlines, in their representations before the regulatory body AERA, have warned that such a massive hike would lead passengers to move away from Delhi airport.

They have asked the government to revisit its revenue-share mechanism with DIAL.

Airline representative bodies like the International Air Transport Association (IATA), Board of Airline Representatives in India (BAR-I) and Federation of Indian Airlines (FIA), have opposed the proposal to hike the navigation, parking and other charges known to the AERA.

Noting that the proposed increase would lead "passengers choosing to transit through other airports" than Delhi, the BAR-I has made it clear that "the airlines cannot afford these escalating increases in cost and some (foreign) airlines have even started winding up their operations".

An analysis of data published by IATA showed that even if a 148 per cent hike suggested by AERA was to go through, Delhi Airport charges in 2012 would be higher than Singapore, Bangkok and Dubai airports combined.

And next year, a further 148 per cent compounded increase would make them over 30 per cent higher than the total of these three and Hong Kong airport put together.

Delhi Airport tariff would also be higher than London Heathrow and Sydney combined. If DIAL`s own proposal were approved by AERA, then this year itself, it would be 20 per cent higher than the combined charges of the European hubs of London Heathrow and Frankfurt, the IATA data showed.

Maintaining that the proposal would "jeopardise the strong traffic growth" being witnessed in India, the airlines said it would also prove to be a "setback to Delhi Airport`s aspiration to be a major aviation hub".

The IATA has suggested that the government "must seriously consider reviewing the existing concession agreement" between DIAL and the Airports Authority of India, under which the former has to give 46 per cent of the revenue earned from airport operations to the latter.

The BAR-I also urged the government to consider using its 46 per cent revenue share "in some form or other to reduce the burden both of DIAL and subsequently of the airlines".

This suggestion, it said, could be considered "as a last resort in view of the deep financial crisis which the industry is facing today".

IATA has estimated the full implementation of AERA`s tariff increase proposal will decrease domestic and international traffic by 5.9 and 6.5 per cent, respectively.

Defending their case before the AERA, DIAL had said the 774 per cent hike was being sought in accordance with the concession agreement with AAI and claimed that the User Development Fee would rise by an average of only about Rs 400-500.

The increase would not only help the airport operator, which has registered a loss of Rs 1,300 crore since it took over Delhi Airport from AAI in 2006, meet costs but also help the state-run airports body to earn more revenue, it said.

DIAL officers have said the demand for such a raise was "not to earn supernormal profits, but are reasonable charges as these have not been increased in the last ten years, except once by 10 per cent in 2009."