New Delhi: The Airports Economic Regulatory Authority (AERA) of India has ordered a 25 per cent cut in landing and parking charges at major airports across the country to airlines to help them tide over the financial crisis arising out of the West Asia crisis.
This move came after the government asked for temporary support to airlines hit by rising costs linked to the Iran conflict. IndiGo and Air India has raised the issue of reduced charges, Reuters reported.
The reduced charges will only be for domestic flights though and last for three months.
Indian carriers are suffering as they are unable to use Pakistan airspace after Operation Sindoor. Flights to the West are taking diverted routes, leading to more fuel consumption. Added to this is the rise in operating costs due to the West Asia conflict.
According to the International Air Transport Association, airport and air navigation charges are the third-largest cost for airlines after fuel and labour.
The order is temporary and airports can recover revenue losses through future tariff revisions, AERA has said.
This relief to the airlines will lower non-fuel operating expenses, partially offset additional fuel costs on longer routes and improve short-term cash flow, as reported by NDTV.
Markets have already taken note of this development that came hours after the ceasefire between the US and Iran. Airline stocks rallied since the morning, with IndiGo shares jumped as much as 10 per cent.
While passengers may not directly benefit from this immediately, they can hope that airlines would not hike fares. They can also expect better route economics for domestic flights as well as improved on-time performance if financial stress eases.
Any revenue shortfall for airports will be considered in future tariff reviews, AERA has said. This relief is clearly short-term support for airlines during a difficult phase.
