New Delhi, (Asian independent) India’s private airport operators have urged the Centre to provide them relief amidst an extremely challenging environment.
“Relief measures are required not only to ensure sustaining operations at airports, but also needed to save jobs and allow economic recovery of the airport sector,” the Association of Private Airport Operators said in a statement.
According to APAO, while the first wave of the pandemic had already wiped out traffic in FY21, denting the financials of the airports, the onset of the second wave of Covid-19 has further compounded the crisis as domestic passenger traffic has dropped to less than 18-25 per cent of pre-Covid levels.
“Furthermore, international traffic, which is invariably the high yield segment for airports, has been suspended for the last 14 months and there are no sign of restart of scheduled operations in near future.
“In addition to this, the looming threat of the 3rd wave, which has been predicted to be inevitable by many experts including GoI bodies, indicates a muted traffic recovery even in FY 22 and the traffic will barely reach the FY 21 level which itself was not adequate for financial survival of airports.”
As per APAO, airports are asset intensive businesses with high sunk costs, disproportionate to the revenues generated and having long gestation periods.
“Airports have to incur fixed costs for maintaining and operating airport infrastructure such as runways, taxiways, apron, parking bays, and terminal buildings etc.”
“In airports of total costs incurred, 80-85 per cent is ‘Fixed Costs’. So, while on one side, revenues have dried up, on the other hand, airports have to continue incurring high fixed costs. Airports are the worst affected in the aviation sector.”
Besides, the association said that due to the pandemic, airports had to incur additional operating expenses as well as extra operational capex due to re-designing of infrastructure and SOPs for containment of Covid-19 and for processing of passengers in a safe and convenient manner.
“Airports are not generating sufficient cash flows to sustain operations, and meet debt obligations.
“Poor cash flows and consequently downgraded credit ratings have made it impossible for airports to take further financing support from financial institutions,” it said.