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Business EconomyPosted at: Jun 21 2016 7:45PM


Model for airport fees may increase passenger fares: IATA

New Delhi, Jun 21 (UNI) The world’s largest grouping of airlines, the International Air Transport Association (IATA) has said India’s new aviation policy will make flying expensive as it make its airport regulator toothless and increase airport charges.
According to IATA, the approved policy states that "future tariffs at all airports will be calculated on a hybrid-till basis" which can make air travel more expensive.
"While the draft NCAP indicated that 'tariff at all future airports will be calculated on a hybrid-till basis', the final policy states 'future tariffs at all airports will be calculated on a hybrid-till basis'," said Conrad Clifford, Regional Vice-President, Asia Pacific, IATA.
“We are concerned with the way the policy on hybrid till was written. While the draft NCAP (National Civil Aviation Policy) indicated that ‘tariff at all future airports will be calculated on a hybrid till basis’, the final policy states, ‘future tariffs at all airports will be calculated on a hybrid till basis,” said IATA.
According to IATA, this change will impact the basis for tariff determination for private airports in India, and also signal AAI (Airports Authority of India) to switch from the single till approach used currently, to the hybrid till. This makes AERA (Airports Economic Regulatory Authority) a toothless entity. Passenger charges in India will increase, making air travel more expensive.
Clifford said that it contradicts one of the stated intentions of the NCAP to make flying affordable. Airlines prefer single till model of economic regulation as it reduces airport charges, while airports prefer dual till. Some airports have a middle path of regulation called the hybrid till.
Clifford said while he welcomed the policy, the group will be approaching the Indian aviation ministry to clarify the seemingly minor change in the wording, which has a major impact on airport charges in India.
The aviation policy has reduced economic regulation in India to a single bullet point by mandating hybrid till as the basis for tariff determination, while being silent on other critical aspects of economic regulation such as the rate of return, regulatory asset base, separation of airport assets and costs etc., he said.
“It ignores the conclusions reached by AERA and the Ministry of Finance after an extensive evaluation that the single till is the most appropriate approach for India, with no explanation given for upturning AERA’s earlier Order,” Clifford said.
IATA represents about 260 major airlines, primarily major carriers, from 117 countries.
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