Private airport operators seek relief after tariff cut, warn of cash-flow strain

NEW DELHI: A tariff cut meant to ease airline costs is squeezing India’s private airport operators, who are warning of cash-flow stress and seeking temporary relief from revenue-sharing obligations.

The Association of Private Airport Operations (Apao), which represents 14 public-private partnership airports, has written to the civil aviation ministry flagging that the mandated reduction in landing and parking charges “is likely to materially affect the airport operator’s immediate cash flows, debt repayment ability and operational sustainability.”

Mint has seen a copy of the 30 April letter, signed by Apao secretary general Satyan Nayar. Airports under the association include those operated by Adani, GMR, Zurich Airport International AG, and Bangalore International Airport Ltd.

“It is essential for MoCA (ministry of civil aviation) to ensure that the benefit of reduced landing and parking charges is passed on by the airlines to passengers,” the letter addressed to Samir Kumar Sinha, secretary, civil aviation ministry, said, adding that, “There is no enforceable mechanism to ensure that reduced charges translate into lower airfares.”

Nayar was not immediately available for comment.

On 8 April, the Airports Economic Regulatory Authority (Aera) ordered a 25% reduction in landing and parking charges for domestic flights at major airports for three months, aiming to ease airline costs amid high jet fuel prices following the war in West Asia. Airlines had lobbied for relief citing strained finances and rising operating costs.

Airport operators say the move cuts revenues immediately while costs remain largely fixed and non-deferrable, creating a timing mismatch even though Aera has allowed future recovery of the shortfall. “The immediate cash flow impact is significant. The mismatch between current revenue loss and future recovery places substantial strain on airport operations and debt servicing,” the letter said.

The association warned that operators are already contending with weaker traffic, especially on international routes, alongside rising costs. “Airports in India…are facing traffic reductions, revenue losses, cost escalation, and operational risks,” it said, adding that “non-aeronautical revenue… is lost forever and there is no way to recover them.”

Non-aeronautical revenues include income from retail and duty-free shops, food and beverage outlets, real estate and advertising.

Airports are also required to share revenue with the Airports Authority of India (AAI), a burden Apao said has not been eased alongside the tariff cut. “In the absence of any corresponding interim relief… the burden of the tariff reduction disproportionately rests on airport operators,” the letter said.

The group has proposed deferring payments to AAI, waiving penalties and allowing higher charges after the relief period. It also suggested that “the loss due to landing and parking be compensated by increase in user development fees for international passengers in the same period.”

Separately, the association urged the government to address fuel costs, noting that “the cost of aviation turbine fuel (ATF) forms a far larger component of the airline costs, as compared to landing and parking charges.” Jet fuel typically accounts for 35-40% of airline operating costs, while landing and parking charges account for 4-5%.

The plea comes days after the Federation of Indian Airlines, whose members include IndiGo, Air India, and SpiceJet, called for further government intervention to reduce jet fuel prices on international routes, warning of route cuts and aircraft groundings if costs remain elevated.