Airports - Myth or Reality

The big question is whether airlines in India are ready to own and operate a low cost airport. The present state of Indian aviation does not provide any such hope.

Ryanair, the lion amongst low-cost airlines across the world, recently caused a ripple in aviation circles by backing out of its slots in Copenhagen’s new terminal citing high expenses as the reason. The remarkable point there was that the terminal in question was CPH Go—the low cost terminal that Copenhagen Airport opened on October 31, 2010. The terminal introduced some new concepts designed to increase efficiency. Among its cost-saving measures is an entirely self-service check-in. The raison d’être of the new terminal is the need for cheaper and more efficient handling of passengers, aircraft and baggage for low fare (a term used here to include low cost, budget, value and economy airlines). The implication there is that low fare airlines, which are expected to be more time and cost-efficient than full service ones, would carry out turnaround in less than 30 minutes and have the bulk of their passengers checking in online. In return, these airlines are offered terminal facilities at costs lower than those at regular terminals.

The new terminal at Copenhagen Airport was, however, given a cold shoulder by the world’s largest low-cost airline. After having been allocated arrival and departure slots, Ryanair has surrendered them stating that the terminal was too expensive. The rejection of a low-cost terminal by a low-cost airline because it finds the costs too high, is thought provoking for India. With its low fare air carriage exceeding the full fare carriage, India needs to carefully examine the feasibility of low-cost terminals in its ongoing airport development programme.

More than five years have passed since the resurgence in Indian aviation began. However, there has been no talk of or discussion initiated on the possibility of low-cost terminals in India. This, despite the fact that one of the first airlines to be launched in this new phase was Air Deccan—a truly low-cost airline. With its one-rupee fare and the appeal to the ‘common man’ it offered to a large base of middle income group families unprecedented opportunities to fly.

Captain Gopinath’s low-cost model did not mirror any preceding model with low cost pretensions. There were no endeavours to obtain discounts from any airport on account of the low cost character of the airline, nor were any concessions sought from any government or private service providers or vendors. The low-cost label was a marketing tool rather than the reflection of a philosophy. The low fares were supported, not by subsidies or concessions, but by often drastic steps internally to cut costs—often with collateral deficit in safety levels. As is the nature of things, Air Deccan—being the first low cost airline—set the template for all others in India. As airports were government-managed, differential treatment was neither considered possible nor asked for. As time went by, the low cost/fare model caught the imagination of more and more airlines which became operational in the years following the launch of Air Deccan in 2003.

Another development that started almost at the same time was the attention given to the development of airports, existing and new. The PPP and the private models that were ushered in to develop the airports at the metros (Bengaluru, Kochi, New Delhi, Hyderabad and Mumbai) brought in a culture of such avaricious and wanton revenue-generation policies and devices by the airport operators that any chance of getting a differential treatment for low-cost airlines was strangled. Low-cost airlines have resigned themselves to using and paying for facilities identical to those being provided by airports to full service carriers. Thus the possibility of low-cost terminals in India has been a non-starter.

The institution of an Airports Economic Regulatory Authority (AERA) has so far not addressed this issue either. There is no mention in the AERA Act about the possibility of any special consideration to the status of low-cost airlines in India. In one AERA meeting, when airlines, especially the low fare carriers protested against the new fees and charges being levied upon them, one of the Directors of a private airport chided them for their approach which was akin to paying dhaba food costs for five-star cuisine. The reference was to the improved ambience along with facilities such as common user terminal enabler (CUTE), in-line baggage screening and so on. Expectedly, one low-cost airline representative shot back with the statement that they were quite content with having and paying for dhaba food and had not asked for the five-star fares in the first place. His statement reflected the prevailing mood.