Rising airfares are a major cause of concern for passengers and the on-going festive season has led to airlines hiking the airfares beyond limits on certain routes. Although Union Civil Aviation Minister Rammohan Naidu has intervened in the matter, there are a lot of misconceptions linked to the rising airfares.
Many believe that huge airport charges have led to rise in airfares. Clearing the air around this, Stefano Baronci, director general, Airports Council International (ACI), Asia Pacific & Middle East said that airport charges are an important element of the commercial aviation ecosystem for infrastructure development but the increase in airfares is not linked to a rise in the charges.
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He was speaking on the backdrop of International Air Transportation Association (IATA) flagging concerns over a steep rise in airport charges.
Baronci further added that the charges are a critical source of revenue for the airports. "Failing to address the capital expenditure requirements to accommodate the projected growth could have serious socio-economic consequences," Baronci added.
In a statement, he noted that airports are highly infrastructure-intensive businesses, with their cost structures dominated by significant fixed costs for the operation and upkeep of essential infrastructure such as runways, taxiways, aprons, parking stands and terminal buildings.
Further elaborating citing statistics, Baronci said: "The impact of airport charges on passengers is very small to negligible. The full basket of airport charges collectively represents only 5.1% of the base airfare and ancillary fees."
According to ACI's forecast, the passenger traffic in Asia Pacific is expected to touch 8 billion in 2024 from 3 billion in 2024. The region is also one of the fastest-growing region with a CAGR (Compound Annual Growth Rate) of 5.8%.
In the next 20 years, nine out of the top 10 fastest-growing aviation markets will be in the Asia Pacific region, with India being the second fastest-growing market.
"Airports are highly infrastructure-intensive businesses, with their cost structures dominated by significant fixed costs for the operation and upkeep of essential infrastructure such as runways, taxiways, aprons, parking stands, and terminal buildings. As passenger numbers continue to grow, these fixed costs become even more critical to address," Baronci said.
Just last week, Willie Walsh, director general, IATA had flagged the topic of airport charges and warned the countries to be careful around airport charges. He had even congratulated India on the recent investments in infrastructure.
"These investments will pay dividends but only if costs are controlled, at the moment, we continue to be concerned around the very significant increase in airport charges in India," Walsh added.
The Airports Economic Regulatory Authority (AERA) takes care of tariffs for major airports but in recent years, the charges at some airports have gone up.
About 133 airport operators, operating 624 airports from 47 countries/ territories are members of ACI in the APAC & Middle East. Indian airport operators and Airports Authority of India (AAI) are also part of ACI.
Published: 18 Sept 2024, 12:09 pm IST
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