Airport charges account for only 5-6% of airfares: GMR executive

Airport charges account for only 5-6% of airfares and are linked to the investment needed to expand infrastructure, a senior GMR executive said while defending the rising cost of airport operations.

The development came a day after IndiGo chief executive officer (CEO) Willie Walsh had called for lower airport charges and taxes.

“Airport charges are too high and so this market would do much better if we had lower taxes. So lower taxes, lower airport charges, that is the way forward,” Walsh said on Monday, arguing that airports should be more competitive in their pricing as they are effective monopolies.

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Offering a contrasting view, SGK Kishore, executive director of GMR Group, said airport charges were not determined arbitrarily by airport operators but through a regulated process.

“There is a clear economic regulator (Airports Economic Regulatory Authority of India Act) who looks into what the airport charges should be. Neither I have any option nor he has any option. There is a clear formula,” he said.

He said charges were linked to the scale of capital investment required to keep pace with the growth in air traffic.

“The more capital the airport industry goes into the project, the airport charges are going to grow,” he said, adding that passenger traffic at major airports had grown at double-digit rates in recent years and at around 18-20% before the Covid-19 pandemic.

“When markets are growing, if I don’t do the capital infrastructure, where will all the aircraft be parked?” Kishore said, pointing to the need for airports to prepare for the large number of aircraft being added by airlines. He said the increase in charges needed to be viewed in the context of the infrastructure required to support the industry’s expansion.

Kishore also said airport operators were looking to improve the use of existing infrastructure rather than rely only on fresh capital expenditure. GMR, he said, had been working to increase terminal throughput through technology without compromising passenger experience.

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“Getting more out of the same airport, getting more out of the same terminal, where technology can come, where it can increase the throughput without compromising on the experience,” he said.

He cited changes in terminal planning, including the use of technology to move some processes traditionally carried out inside terminals to locations outside them. GMR has experimented in Hyderabad with check-in baggage processes being carried out outside the terminal, he said, as airports look to reduce the space and costs required for operations.