By Anwesha Ganguly
India’s private airport operators want the government to impose a moratorium on revenue payments to the Airports Authority of India (AAI) as the financial crisis for the aviation sector deepens amid the Covid-19 outbreak. Currently, private airport operators like the GMR and GVK have concession agreements with AAI, under which they must pay a percentage of their revenue to the government authority. According to industry estimates, airports in the Asia Pacific are expected to face a 24% drop in revenue during January-March.
Industry sources said international traffic to India’s busiest airports have less than halved as on date. With the government’s decision not to allow any international aircraft to land in India from March 22 for one week, the aeronautical revenue stream will dry up further. “We are meeting with the ministry next week to ask for a moratorium on payment of revenue share as a part of concession agreements. We have also sought waiver on debt obligations to banks and financial institutions as well as moratorium on loans installments,” said Satyan Nayar, secretary-general, Association of Private Airport Operators (APAO). The country’s busiest airports, including the Delhi, Bengaluru, Hyderabad and Mumbai airports, are run by private operators.
The Delhi International Airport is run by the GMR group, which pays 45.99% of its revenues as fees to the AAI, while the Mumbai International Airport is run by the GVK group, which pays AAI 38.7% of its revenues. Airport operators generate revenue from aeronautical operations and non-aeronautical sources including services provided at airports. Industry sources said the COVID-19 outbreak has not only put a dent on revenue from airport traffic, but also significantly reduced non-aeronautical revenues. “It is difficult to gauge the impact right now. But service providers like food and beverage outlets, cargo service providers, ground handling providers, are also seeking deferment and moratorium on their payment obligations, so that is also a huge impact,” one person said.
Several industry bodies have already made representations to the government to provide financial support to private airports. Last week, APAO had made a representation to the ministry seeking levy of an airport charge to offset the reduced revenue. The suggestion was met with criticism from international lobbies. Earlier this week, the industry body Airports Council International (ACI) called for a suspension of the 80/20 rule, which stipulates that airlines would lose their slots in airports if they are not used 80% of the time, till June.
The body also called for reduction in taxes. The travel and tourism industry is reeling from the impact of the pandemic outbreak, as governments across the world have closed their borders to foreigners. According to industry estimates, around 70% of the 5.5 crore people directly and indirectly employed by the industry could lose their jobs. FE earlier reported that tour operators have also sought financial support from the government. Another tourism industry body wrote to the government on Thursday seeking moratorium on payments. The International Air Travel Association had estimated an impact of up to $113 billion as a result of these disruptions.