Wednesday, April 25, 2012

AERA decision- Fireworks in the air

Neelam Mathews
April 25, 2012

One man's food is another's poison. Even as Delhi International Airport Ltd (DIAL) welcomed the revision in aeronautical charges promulgated by AERA, IATA cried foul. The revised tariffs will be charged in the form of an enhanced Landing and Parking fee for aircraft and a User Development Fee (UDF) for passengers and will be applicable from May 15.

“The increase approved by AERA is extremely disappointing.  This will make Delhi the world’s most expensive airport.  It will also have a larger impact on India and its economy, with an expected 5-8% decrease in demand at Delhi as a result of higher costs, a fall in tourist arrivals and further damage to local and international airline connectivity. This is a big step backwards for Delhi’s ambition to be an aviation hub,” says Albert Tjoeng, IATA’s spokesman for Asia Pacific.

However DIAL has another point of view. It says considering that the charges were stagnant for the last decade (since 2001), “the revision of charges is much below our expectations. Tariff calculations show that the approximate increase in ticket pricing on account of passenger fee per pax, for the year 2012-13, works out to INR 290 on an average for domestic and INR 580 on an average for international. Delhi airport will compare favourably to other major global airports where passenger fees range between $ 25(INR 1300) to $ 30 (INR 1560) on an average, thus making a very soft impact on the passengers.”

That’s DIAL’s point of view, which IATA calls “unacceptable as it violates ICAO’s policy of cost-based charging by having different landing fees for international and domestic flights.  Charging UDF based on distance also violates this principle and in addition, distorts competition and creates a non-level playing field for carriers operating direct flights and carriers operating through an intermediate hub.”

However a DIAL spokesman tells Aerospace Diary: “Nobody questions airlines’ dynamic ticketing pricing where the cost of a ticket on the same flight varies from 10-90% and no price is the same…..What if DIAL started a similar pricing …say charge higher on days when the airport is at its busiest?”

DIAL also says only 1.7% of airlines’ invoicing goes towards airport charges. I have a report on benchmarking of airport pricing and will share that with you once I figure out what it is trying to say!




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