Thursday, October 21, 2021

Airports set to increase revenue after Tata Group takes over Air India

The aviation industry is abuzz with what Air India’s privatisation means for the sector. For starters, industry experts said that with the Tatas getting Air India, airports in the country could possibly earn more revenue.

The Tata Group already operates Vistara and AirAsia and with the acquisition of Air India and its subsidiary Air India Express, it will have the second-largest fleet in the country and a market share that’s possibly next only to IndiGo, which commands 57 percent of the domestic market.

According to PS Nair, former chief executive officer of GMR Airports, with the Tatas holding the controlling stake in two full-service airlines (Air India and Vistara) and two low-fare carriers (Air Asia and AI Express), there will be synergy that will “help in spreading its wings across India, having a positive pan-India impact in ATMs at Indian airports.”

ATM refers to air traffic management, which is the aggregation of airborne and ground-based functions needed to ensure the safe and efficient movement of aircraft during all phases of operations.

Faster turnarounds and better slot utilisation by Tata Group airlines is expected to benefit airports, which will be able to earn more by handling more flights.

Videh Kumar Jaipuriar, CEO of Delhi International Airport, said the Tata Group’s takeover of Air India may lead to an improvement in the full-service carrier (FSC) market share for the company and additional revenue potential at airports.

“An FSC brings in more business-class passengers, who have higher potential to spend at airports,” Jaipuriar said. DIAL operates New Delhi’s Indira Gandhi International Airport. Jaipuriar said Delhi airport will enjoy more benefits including an increase in hub operations, leading to a higher number of transfer passengers.

“Transfer passengers tend to spend much more time at the airport, which directly contributes to non-aeronautical revenue for the airport,” he said. “Dubai’s non-aeronautical income is significant due to a large share of transfer passengers.”

An airport earns aeronautical revenue from operations such as aircraft parking while non-aero revenue comes from shops, lounges and car parking.

Nair said there will be a positive impact on aero revenue in the medium to long run, although in the short term it is unlikely to have a positive impact.

“A pep-up in aero revenue at airports like Delhi where Air India has its base and other metro airports where Air India will have significant operations in the medium term is expected,” he said.

21/10/21 Ashwini Phadnis/Moneycontrol

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