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Airlines

Delhi Airport Tariffs to Rise by 340% to Fund Development Costs

Strategic Insights

— 1 min read

Passengers and airlines using Delhi's Indira Gandhi International Airport may have to pay significantly higher tariffs starting April 1, after the Airports Economic Regulatory Authority (Aera) recommended a 340% hike in airport tariffs. This increase is a compromise on the 874% hike sought by Delhi International Airport Pvt. Ltd (DIAL), the operator. The proposed hike may discourage fliers and worsen the financial situation of local carriers, including Jet Airways, Kingfisher Airlines, Air India, SpiceJet, and GoAir, which are estimated to post a combined loss of $2.5 billion this fiscal year.

Key Takeaways:

  • The Airports Economic Regulatory Authority (Aera) has proposed a 340% hike in airport tariffs from April 1, 2023, to fund the development costs of the Indira Gandhi International Airport.
  • The proposed increase is a compromise on the 874% hike sought by Delhi International Airport Pvt. Ltd (DIAL), the operator.
  • Higher airport levies may discourage fliers, worsening the financial situation of local carriers like Jet Airways, Kingfisher Airlines, Air India, SpiceJet, and GoAir.
  • The hike may lead to a significant increase in airfares, with low-fare carriers like AirAsia and IndiGo potentially imposing a 150% hike in airfare.
  • The proposal has been recommended after a year of assessing the escalated cost of the Delhi airport.
  • The regulator's final order will be released after consultations with stakeholders, including passenger associations, over the next few weeks.
  • DIAL had sought to impose a user development fee on departing and arriving passengers, but this proposal has been rejected.
  • The new tariffs and passenger levies will have to be revised to keep the roughly 150% fee hike in the first year in mind pending final approval.

Statistics:

  • Estimated loss of $2.5 billion for local carriers like Jet Airways, Kingfisher Airlines, Air India, SpiceJet, and GoAir this fiscal year.
  • 340% hike in airport tariffs recommended by Aera from April 1, 2023.
  • 874% hike in airport tariffs sought by DIAL, which has been rejected.
  • 150% hike in airfare potentially imposed by low-fare carriers like AirAsia and IndiGo.
  • ₹778.4 crore collected in non-aeronautical revenue and ₹464.8 crore in aeronautical charges by Delhi airport in 2010-11.

Sources:

  • The Mint (New Delhi)
  • BSE (BSE Sensex index)
  • Aera (Airports Economic Regulatory Authority)
  • DIAL (Delhi International Airport Pvt. Ltd)
  • GMR Group (GMR Infrastructure Ltd)
  • Centre for Asia Pacific Aviation (consulting firm)

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