Airfare hike not linked to rise in airport charges: Airports Council International

Hike in airfares: Airport charges are an important element of the commercial aviation ecosystem for infrastructure development and an increase in airfares is not linked to a rise in the charges, according to the Airports Council International (ACI).

Against the backdrop of the International Air Transportation Association (IATA) flagging concerns over a steep rise in airport charges, ACI also said that the charges will remain a critical source of revenue for airports.

"Airport charges are an important element of the commercial aviation ecosystem for infrastructure development. Failing to address the capital expenditure requirements to accommodate the projected growth could have serious socio-economic consequences," Stefano Baronci, Director General, ACI Asia Pacific & Middle East, said.

In a statement to PTI, 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.

As many as 133 airport operators, operating 624 airports from 47 countries/ territories are members of ACI in the APAC & Middle East. Indian airport operators and the Airports Authority of India (AAI) are also part of the grouping.

Last week, IATA Director General Willie Walsh said that countries should be careful around airport charges and it has concerns about airport charges in a number of countries.

"India needs to be congratulated for the investment in infrastructure in recent years which 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...," he had said.

In India, tariffs for major airports are approved by the Airports Economic Regulatory Authority (AERA), and in recent times, charges at some airports have gone up.

IATA represents around 330 airlines, including Indian carriers, that account for over 80 per cent of the global air traffic.

Meanwhile, ACI's Baronci said the increase in airfares is not linked to a rise in airport charges.

"The impact of airport charges on consumers (passengers) is very small to negligible. The full basket of airport charges collectively represents only 5.1 per cent of the base airfare and ancillary fees," he added.

As per ACI's long-term forecasts, air traffic in the Asia Pacific region is projected to reach 8 billion by 2042 from 3 billion today. Also, it is the fastest-growing region with a CAGR (Compound Annual Growth Rate) of 5.8 per cent, surpassing the global CAGR of 4.3 per cent.

Over the next two decades, 9 out of the top 10 fastest-growing aviation markets will be in the Asia Pacific region, with India being the second fastest-growing market, according to the grouping.

"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.

India is one of the fastest-growing civil aviation markets in the world and has 157 operational airports, heliports and waterdromes.