Logistics

Coronavirus impact: ACI seeks relief package for airports in India, writes to PM Modi

Our Bureau Mumbai | Updated on April 01, 2020 Published on April 01, 2020

A file picture of the Delhi airport   -  V_V_Krishnan

The airport industry in the region employs more than 63 per cent of the aviation industry jobs

Airport Council International, (ACI), the apex body of global airports, has estimated massive losses for Q1 FY21 for the Aisa-Pacific region due to the coronavirus pandemic. ACI said it estimated losses of $5.6 billion, which is a 45 per cent lower compared to original business-as-usual scenario.

ACI has written a letter to Prime Minister Narendra Modi seeking relief for the airports in India.

According to ACI, a prolonged outbreak of the coronavirus may result in a traffic volume loss of close to 1.5 billion passengers. An analysis of preliminary weekly passenger data from January to the middle of March at 12 major hubs in Asia-Pacific, including the Indira Gandhi International Airport, showed an average decrease in traffic by more than 80 per cent by the second week of March, compared to the same period in 2019.

The airport industry in the region employs more than 63 per cent of the aviation industry jobs. Many airports are currently implementing extensive cost containment measures, including unpaid leave for staff, temporary lay-offs, corporate travel restrictions, ending consultancy and external contracts, closure of terminals where technically possible, reduction and suspension of investments.

Despite this, airports’ ability to mitigate revenue losses tends to be limited compared to other businesses because their cost base remains largely unchanged, as more than 2/3 of airports’ operational costs are fixed. Airports must keep servicing their debt, with capital costs typically accounting for 30 per cent of their total costs stemming to a large extent from infrastructure depreciation, it said.

‘Provide relief measures’

“Every passenger lost by an airline is equally a passenger lost by an airport. We would urge your Authority to provide relief measures for the aviation sector to benefit all affected parties of the aviation sector and which will be strategic for the relaunch of the economy as soon as the crisis is over,” ACI said in the letter to PM Modi.

They urged the prime minster to immediately suspend national, regional, local taxes, including passenger departing taxes, specific to the aviation sector – inclusive of those levied upon airports till 31, December 2020. “This would also incentivise passenger confidence to travel. including passenger departing taxes.”

BusinessLine had had reported on March 13 that the Association of Private Airport Operators (APAO) has asked for a moratorium on the payment of concession fees to the regulator. ACI too has appealed for a moratorium on new national and local aviation-specific taxes until 31 December 2020.

Since airports have a huge fixed cost, ACI has asked for protection of airport revenues to finance operations, and bear the high fixed cost. Airports are reliant on revenue from charges on airlines, passengers and

ACI also sought a one-time waiver on suspension or deferment of airport operators’ concession fees to governments.“Governments need to consider, on a case-by-case basis, waiving airport rents and concession fees applicable to airport operators, irrespective of ownership status, given the financial stress they are experiencing,” it said.

ACI warns against introducing it unilaterally for the entire summer season. Keeping this in mind, ACI also sought a waiver of the slot 80/20 rule until the end of June. “Dynamic aviation markets such as Singapore and UAE are offering dispensation of the slot 80/20 rule only for certain markets. Other countries such as the US, China, South Korea, and Japan have introduced a waiver for a shorter period than the entire summer season.”

It also sought waivers on loan for the next six months.

Lastly, ACI has also sought financial compensation for lost revenues due to the Covid-19 pandemic to airport operators undergoing significant capital expenditure programmes or planning to do so in the next 3 years, especially for smaller regional airports (below 1 million passengers).

Published on April 01, 2020

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