In a move that could boost AirAsia’s India operations, the Airports Authority of India has said that it is willing to give a discount on landing and parking charges to the start-up airline or any other airline if it launches flights connecting new airports and builds traffic potential there.

In the case of AirAsia, such routes could be Chennai-Mysore, Chennai-Puducherry or Chennai-Hampi, authority officials said.

On graded basis

The discount will be on a graded basis, which means AirAsia or any other airline will get a discount of 75 per cent in landing and parking charges in the first year of operations provided enough flights are operated to new airports. In the second year, the discount will be 50 per cent and it will come down to 25 per cent in the third year.

The implementation of the proposal, awaiting clearance from the Civil Aviation Ministry, will help both the start-up and new airlines, as landing and parking charges constitute 10-12 per cent of the cost of operations of an airline.

Citing the commercial confidentiality of agreement, AAI officials declined to get into specifics of how many flights AirAsia will have to operate to a new airport or how many new airports the start-up airline will have to link to be eligible for the discount.

AAI officials confirmed that AirAsia officials had met with them and had been asked to show the “volume” of flights that they planned to operate on “virgin” routes to be eligible for the discount.

Financial viability

Explaining the rationale behind the latest move, an official said that as airlines start operations to new cities, it will help make airports financially viable.

To help airlines achieve financial viability on these new flights, the airports authority does not mind foregoing some money initially by offering discounts, as in the long run, such a move will benefit the State-owned airport operator.

The airports authority has modernised Chennai and Kolkata airports this year. With this, the passenger handling capacity of both the airports has gone up, but the entire capacity is not being utilised. For example, Chennai has unutilised capacity of over two millions at the modernised premise and nearly four millions at the closed old domestic terminal. The new initiative of discounts will help in earning some revenue from these.

(This article was published on July 6, 2013)
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