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Airlines oppose Bangalore airport’s tariff hike proposal

Published : Sunday, 25 July, 2021 at 12:00 AM  Count : 179

NEW DELHI, July 24: 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 catch-22 situation has come to the fore yet again on Bangalore International Airport Ltd's (BIAL) proposal to increase aeronautical tariffs and user development fees (UDF) starting this October till March 2026.
Citing "precarious financial situation," pandemic-hit BIAL has sought a steep phase-wise hike for its third control period (April 1, 2021-March 31, 2026) 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 (proposed) rates are way too high than the present rate and will raise average ticket prices by a great extent. Further, in the present situation it is unlikely that international travel will resume to normalcy level shortly, which makes domestic travel more important for airlines in India jump in UDF will discourage passenger travel," Air India says in its response to comments sought by Airports Economic Regulatory Authority (AERA) to BIAL tariff proposal.
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. "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 with limited financial support from the government, airlines are constrained to implement severe cost control measures to sustain its operations.
In the given circumstances, it is imperative that AERA does not take any steps, including by way of increase in aeronautical tariff, during the third control period, which precipitates any further adverse financial impact on the airlines," FIA has said in its response to AERA.
The Association of Private Airport Operators (APAO), that represents the PPP-run airports, has presented their side to AERA in their comments on BIAL proposal.
"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," it says.    -TNN

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