Are India’s airports set to become more expensive? The Airports Authority of India has formulated an ambitious modernization plan for over 50 airports around the country. But does this mean you’re going to foot the bill for this makeover? Read on to find out.
Who is going to pay for the modernization of India’s airports? The money is being put up by lenders, the government and in many cases, private joint-venture consortia. But will you be asked to fork out more, to help in the repayment tomorrow? How can India’s airports become world-class without costing you the earth?
Airports generate revenue by charging the airline for landing, overflying, and taking off; (this includes the navigational assistance), landing, parking and housing and terminal landing facilities. There are also charges for cargo handling. There are different rates for different carriers, aircraft and day or night operations, and so forth.
In India, your ticket pays the airline’s wages, but also pays the airline bill for all this; this money is then paid to the Airports Authority of India. This monolithic organization is responsible for the construction, maintenance, operation and modernization of almost all of India’s civil airports.
In the past, the costs of renovation were simply passed on to you; the gap between rail and airfares was huge, and growing. The arrival of low cost airlines changed the equation slightly; but in the face of increasing airport charges, these airlines were becoming uncompetitive. The capitulation of the pioneer, Air Deccan, is proof.
So what is the way out? The major airports of the world generate nearly half of their revenue from commercial activity in and around the airport complex; this includes hotels, restaurants, shops, travel agencies and the like. These establishments pay rentals for the land, and may also pay a percentage of their profits to the airport.
While existing airports will have to restructure their layout to optimize commercial revenue, greenfield airports such as Bangalore and Hyderabad have additional land factored in for just this. So the government does not plan to make you pay more for air travel!
Will this be a great development opportunity for India’s airports or will it become a dirty land-grab? Will India’s airports become world-class?You may also be interested in :