Kingfisher Airlines, which was considered India’s second-largest airline by market share until a year ago, lost 11.5 billion rupees in the January-March quarter, compared with a loss of 3.6 billion rupees a year earlier.
Jet Airways, India’s largest airline, posted a loss of nearly 3 billion rupees in the same period.
The FIA slammed AERA’s order to hike fees as “unlawful” because it was passed without following basic regulatory procedures.
DIAL, however, defended the move in a letter to the International Air Transport Association, saying there has been no increase in more than a decade. “The airport charges of Indian airports were not increased during the last 10 years except by [a] nominal 10% in the year 2009. The airport charges before revision have been historically at [a] very low level when compared to the other international airports,” DIAL says.
According to a DIAL official, the airport operator had sought a 24% return on equity but was granted only 16%. Similarly, for quasi-equity-based return on refundable security deposits, DIAL was granted zero return. These factors contributed to the fact that the approved fee revision was not in line with expectations.
DIAL, which had reported a loss of 4.5 billion rupees in the past fiscal year, expects to lose 9 billion rupees during the current fiscal year. “We have got less than 50% of what we asked for as per our legitimate entitlement. While the quantum of increase is much lower than our expectation, nevertheless, this increase will be a significant step in stemming the losses of DIAL and taking DIAL towards viability,” the DIAL official says.
Analysts say the fee hike will make Delhi the world’s most expensive airport. It will also have a larger impact on India and its economy, with an expected 5-8% decrease in demand at Delhi as a result of higher costs, a fall in tourist arrivals and further damage to local and international airline connectivity.