Last Updated: July 25 2021
Private airport operators and airlines have locked horns over the issue of the former’s demands to raise tariffs for funding their ongoing expansion projects.
Airlines, on their part, oppose any hike saying this would increase cost of flying and further impact air traffic.
This situation has come after Bangalore International Airport Ltd’s proposal to increase aeronautical tariffs and user development fees starting this October till March 2026.
Citing “precarious financial situation,” pandemic-hit BIAL has sought a steep phase-wise hike in UDF starting this October till March 2026.
Domestic UDF is sought to be hiked in phases from current Rs 217 to first Rs 450, then Rs 550 and finally Rs 555. Similarly the hike proposed for international passengers is from the current Rs 839 to Rs 1,350, then Rs 1,650 and finally Rs 2,220.
The Federation of Indian Airlines (FIA), that represents all major Indian carriers, has cited the precarious financial health of airlines due to low traffic during the pandemic stating airlines continue to incur high operational costs on account of higher airport charges and taxes, and this has aggravated the imbalance in the cash flow position also with limited financial support from the government, airlines are constrained to implement severe cost control measures to sustain its operations.
The Association of Private Airport Operators (APAO), that represents the PPP-run airports, has presented their side to AERA stating “The fall in traffic and various lockdowns due to Covid have adversely impacted BIAL’s finances and expansion projects. Despite this, BIAL has extended support to different stakeholders.” Recounting losses suffered by BIAL, which started operation in May 2008, in early years “on account of inadequate tariffs”, APAO said “…this loss can only be recouped through the tariff mechanism for the subsequent period. Denial of this recouping mechanism is against principles of natural justice to BIAL…”