Flying from Mumbai to be costlier

Passengers will have to pay Rs 346 and Rs 692 more on domestic and intl tickets from Feb 1

In a move that will make air travel from Mumbai costlier, the Airports Economic Regulatory Authority (Aera) has approved a 154 per cent increase in aeronautical charges at the city’s airport and, for the first time, introduced a steep user development fee (UDF) on the passengers flying out of the city. The order would take effect from February 1 and be in force for a year. The aeronautical charges include those for parking, landing, fuel throughput and common check-in terminals.

From February 1, passengers would have to pay Rs 346 and Rs 692 more on their domestic and international tickets, respectively. However from April 1 to March 31 next year, passengers would pay a lower UDF of Rs 274 and Rs 548 for domestic and international travel, respectively. The regulator has also allowed the Mumbai airport to levy penalties on private jets overstaying at the airport but has rejected its demand to levy a fee on airlines that do not utilise their slots.

These measures would lead to an average increase of five-seven per cent on domestic fares of Rs 5,000-7,000 from Mumbai.

These are, however, much less than what Mumbai International Airport Ltd (MIAL) had sought from the regulator. It had asked for an 872 per cent increase in rates. The rise is also lower than that at the Delhi airport, which had secured a 340 per cent increase in rates last April. Foreign airlines had challenged the Delhi airport’s rate hike before Aera’s appellate tribunal. The case is pending.

One of the reasons for Aera to allow a lower hike at Mumbai is that the airport operator included non-aeronautical revenue in determining its hypothetical regulatory asset base, civil aviation ministry sources said. It has approved 16 per cent return on equity, as against 24 per cent sought by MIAL.

Airlines are expected to oppose the rate hike in Mumbai. Cathay Pacific India general manager Tom Wright said: “Indian airports are becoming some of the most expensive in the world; we are concerned. How is this going to help India make its airports global hubs?”

British Airways’ regional commercial manager for South Asia, Christopher Fordyce, said in a statement: “We constantly review our operations to ensure operating on a route makes viable business sense. Hiking costs to such levels will bring India into sharp focus.”

Airport operators, however, say the aeronautical costs account for only 1.5-2.5 per cent of an airline’s cost of operation (in Delhi, it comes to Rs 40 per passenger). So, airlines should be able to absorb the cost, especially at a time when the market is slow.

http://www.business-standard.com/india/news/flyingmumbai-to-be-costlier/499095/