Turbulence in Airfare: Pandemic and Privatization Fuel Thiruvananthapuram Airport Tariff Hike
The Thiruvananthapuram airport experienced a significant tariff surge on July 1st, a consequence of the COVID-19 pandemic’s financial repercussions and delays in tariff revisions following the airport’s privatization. This revelation emerged during a parliamentary session, sparking concerns among Kerala’s Members of Parliament (MPs) who sought a reassessment of the Airports Economic Regulatory Authority’s (AERA) June 21st order.
Skyrocketing Fees: Passengers and Airlines Bear the Brunt
The AERA’s order brought about substantial fee increases, notably a 50% hike in the user development fee (UDF) imposed on domestic passengers, rising from ₹506 to ₹770 for a year, with further annual increments. Additionally, a new user fee was introduced for both domestic and international arrivals, while aircraft landing charges tripled from ₹309 to ₹890 per metric tonne.
Government’s Rationale: Pandemic Under-Recovery and Privatization Delays
Minister of State for Civil Aviation, Murlidhar Mohol, attributed the tariff escalation to the pandemic’s adverse impact on air traffic, leading to a substantial under-recovery of ₹789.29 crore during the second control period. This deficit was factored into the revenue requirements for the current control period, adhering to established tariff guidelines.
Mohol further elaborated on the privatization-related delays, highlighting the transition period following the airport’s handover to Adani Enterprises Limited in October 2021. This transition hindered the timely determination of tariffs for the subsequent control period, as the concessionaire was restricted from seeking tariff increases for 365 days post-takeover.
Contentious UDF and Non-Aeronautical Revenue Concerns
The introduction of UDF for disembarking passengers drew criticism, but the government defended it as a measure to alleviate the financial strain on airlines and departing passengers, citing similar practices at other airports.
Moreover, during the tariff determination process, the AERA raised concerns about the airport operator’s under-projection of non-aeronautical revenue, which is typically utilized to subsidize costs imposed on passengers and airlines. The AERA subsequently increased the non-aero projections fourfold to ₹392 crore from the proposed ₹102 crore.
Navigating the Future: A Balancing Act
While the government maintains that the AERA strives to strike a balance between the interests of service providers and end-users, ensuring reasonable returns on investments for airport operators, the recent tariff hikes have ignited debates about their potential impact on passenger affordability and the overall aviation sector. As the industry grapples with the pandemic’s lingering effects and the complexities of privatization, finding an equitable solution remains a crucial challenge.
Key Takeaways:
| Key Point | Description |
|---|---|
| Thiruvananthapuram airport tariffs increased on July 1st. | Due to COVID-19 under-recovery and privatization-related delays. |
| UDF for domestic passengers increased by 50%. | Along with new fees for arrivals and tripled aircraft landing charges. |
| Government cites pandemic under-recovery and privatization. | As reasons for the tariff hikes. |
| AERA raised concerns about under-projected non-aero revenue. | And subsequently increased the projections fourfold. |
| Debate ensues regarding affordability and impact on aviation. | As the industry navigates pandemic recovery and privatization challenges. |
Soumya Smruti Sahoo is a seasoned journalist with extensive experience in both international and Indian news writing. With a sharp analytical mind and a dedication to uncovering the truth, Soumya has built a reputation for delivering in-depth, well-researched articles that provide readers with a clear understanding of complex global and domestic issues. Her work reflects a deep commitment to journalistic integrity, making her a trusted source for accurate and insightful news coverage.
