Indian airport operators face severe cash crunch

Our Bureau Mumbai | Updated on June 09, 2021

Over 85 per cent of the total costs incurred by the airport operators are fixed costs   -  NS

Airport apex body says aeronautical revenues have reduced by 75-80 per cent

Hit by the Covid-19 pandemic, Indian airport operators are struggling with a severe cash crunch, according to the Association of Private Airport Operators (APAO). In a letter written to the Ministry of Civil Aviation (MOCA), the airport apex body, requesting help, said that the aeronautical revenues have reduced by 75-80 per cent whereas, the non-aeronautical revenues have dropped by 85-90 per cent.

Over 85 per cent of the total costs incurred by the airport operators are fixed costs. The association said this issue makes it difficult for the operators to survive.

“Due to Covid-19, airports had to incur additional operating expenses and capex due to re-designing of infrastructure and SOPs for containment of Covid-19 and processing of passengers in a safe and convenient manner,” a statement said.

The body represents airport operators that work on the public-private-partnership model. Its members include Hyderabad, Goa, Bangalore, Mumbai, Cochin, Delhi among other airports.

The body wrote that with the steep drop in air traffic, airports are finding it difficult to sustain their operations. “Airports are not generating sufficient cash flows to sustain operations, and meet debt obligations. Poor cash flows and consequently downgraded credit ratings have made it impossible for airports to take further financing support from financial institutions,” it said.

‘Precarious situation’

“As the cash-flow situation is precarious,” the body said that it has constantly been knocking on the doors of the government for relief. It further added that the “relief measures are required not only to ensure sustaining operations at airports, but also to save jobs and allow economic recovery of the airport sector.”

“With stress on the finances, there is a worry that many of these jobs will be lost,” it feared. APAO pointed out that other countries like Germany, and France are providing support by giving part wages to these workers.

Several other countries like the UK, the US, Ireland, and Scotland among others have given a hefty relief aid for the operators to tide through the Covid-19 pandemic over the past year. However, the Indian government has only recently included the aviation industry in the ECGLS, and according to experts, that too, is a meagre amount.

Published on June 09, 2021

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