AAI told to prune capital expenditure to improve finances

New Delhi: The government has asked state-owned Airports Authority of India (AAI) to prune its capital expenditure for it to improve finances and eventually list on the stock exchanges, but the move could undermine the agency’s efforts to modernise the country’s airports.
A finance committee headed by the joint secretary and financial advisor in the civil aviation ministry, EK Bharat Bhushan, has said the airports operator needs to take cost-cutting measures on a fast footing and rationalise airport development work, a senior official of the AAI told ET.
AAI is currently modernising 35 non-metro airports besides two metro airports in Chennai and Kolkata, which involves an investment of Rs 12,434 crore.
“AAI has not cut down its projects despite its revenues taking a hit due to a fall in the aircraft movement and reduced passenger traffic. It needs to be serious in cutting costs and linking investment with revenues,” the official said, requesting anonymity.
The free fall in air traffic as a result of the economic slowdown has forced airlines to cut fleet size and capacity. This had a adverse impact on the airport operator’s revenue. Domestic carriers have cut down their flights by nearly 25% in the last one year.
Several international carriers such as Virgin Atlantic, Singapore Airlines and SriLankan Airlines reduced the frequency to and from India during this period to contain losses. Airlines pay landing and parking and navigation charges to the Authority.
20/10/09 Nirbhay Kumar/Economic Times

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Categories: Airports Oct 2009