Private Indian airports warn government-mandated charge cut may hurt cash flows

By Abhijith Ganapavaram

April 30 (Reuters) - Private Indian airport operators have warned that a government-directed 25% cut in landing and parking charges could strain cash flows and debt servicing, with no enforceable mechanism to ensure that airlines pass on the benefit to passengers, according to a letter seen by Reuters.

• India's airporttariff regulator ordered major airports to cut landing and parking charges by 25% for three months for domestic flights, following directions from the federal government, to offer relief to the country's airlines that are under financial pressure from the Iran war.

• The Association of Private Airport Operators (APAO) said in the letter that it supported the intervention but sought urgent policy and regulatory support, citing traffic reductions, revenue losses, cost escalation and operational risks amid uncertainty over the evolving geopolitical situation.

• The Ministry of Civil Aviation, Airports Authority of India (AAI) and APAO did not immediately respond to Reuters' requests for comment.

• The order was issued without consultation with airport operators, APAO said, adding that a uniform 25% reduction does not adequately consider airports’ domestic-international traffic mix, creating significant revenue imbalances.

• The association sought deferment of revenue share or per-passenger fee payments owed to AAI during the relief period and proposed an upward revision in landing and parking charges after the relief period to recover the shortfall.

• Aviation turbine fuel costs account for a much-larger share of airline costs than landing and parking charges, the letter noted.

• APAO asked the ministry to ask state governments charging value-added tax on jet fuel above 5% to reduce it to 5% or below.

• Adani Airports Holdings Ltd, a unit of Adani Enterprises ADEL.NS, is India’s largest private airport operator by number of airports, followed by GMR Airports GMRI.NS.