Thursday, June 01, 2017

Airport operators oppose cap on revenue share of ISPs

Airport operators have opposed a proposal by Airports Economic Regulatory Authority of India (Aera) to cap royalty paid to them by independent service providers (ISP) to 30% of latter's gross turnover.

ISP includes companies dealing in ground handling, cargo handling and fuel services.

Mumbai: At present, airport operators charge as high as 40-42% from some of the ISPs, which leads to losses for the company and increases the cost to the end consumers, sources said.

Airport operators, which include privately-run airports in Mumbai, Delhi, Hyderabad, Bengaluru and Cochin, have asked Aera to keep off the issue as it will increase the airport costs and raise airfares.

On the other hand, air passengers association and cargo companies say high charges of airport operators are against the rules of United Nations-backed ICAO and European Union and limit the aviation sector growth in the country.
The proposal came after Aera noticed that some airport operators, due to lack of any regulation, were charging unreasonably high royalty/ revenue share from the ISP.

Aera in its consultation paper on the subject last month, said, "The rates charged for services do not seem to be commensurate with the cost, or quality of service provided," and are, therefore, inconsistent with the policies of International Civil Aviation Organization (ICAO) relating to tariff determination.
01/06/17 Shahkar Abidi/DNA