Falling Numbers

Jet Airways’ closure has meant a decline in the earnings of the country’s top airports, especially Delhi and Mumbai. Taking a look at the diminishing numbers at most airports, AMEYA JOSHI points out that while it will take some time to get back to the growth path that existed for the last five years, every airport operator will have to bear up with lower passenger service fee (PSF) and User Development Fee (UDF).

- Ameya Joshi

As Jet Airways truncated its schedule and eventually suspended operations on April 17, 2019, apart from the passengers – there was one more entity which started at trouble. This was the airports business. Every time a plane lands or takes off, the cash registers at airports start ringing and the airport experiences the same seasonality and profitability cycle as the airlines since 100 percent of its business is directly or indirectly dependent on the airlines.

Airports revenue is classified into aeronautical and non-aeronautical. Aeronautical revenue rings in every time an aircraft lands or takes off. The aeronautical revenue comprises:

Landing & Route Navigation Facilitation Charges (RNFC)

Every time an aircraft lands, it has to pay charges for using the airport and services of the Air Traffic Control (ATC). This includes the Route Navigation and Facilitation charges that are calculated on the weight of the aircraft and the distance it has flown.

Use of facilities

Airlines use aerobridges, check-in counters, office space at airports, facilities like ground handling, fuel services, etc. Every such service is charged and most of it is either per unit of time or per departure. Airports earn from every departure of the airline.

The biggest non-aeronautical revenue comprises:

Retail

Every time a passenger spends at the airport, the airport operator makes money. Worldwide, most airports have a revenue-sharing arrangement with airport retail, wherein the airport earns a fixed amount of rent every month and earns a percentage of the sale, over and above. If you ever wondered why things are expensive at airports, you now have an answer.