Why does IndiGo want lower charges at Mumbai airport? CEO Willie Walsh weighs in on airport investments
Willie Walsh, the Chief Executive Officer of IndiGo, India's largest domestic carrier, said on Tuesday that charges levied per passenger at the Mumbai airport should be reduced once the redevelopment of Terminal 1 is complete.
Both Mumbai and Navi Mumbai airports are controlled by entities of the Adani Group. The airports charge airlines aeronautical charges per passenger for services like parking, landing and others, and this cost is added to the ticket prices of customers.
Walsh insisted that airlines should be allowed to recover their cost of capital as rising airport charges and investments add to their operating expenses and contribute to airfares. He has called for greater scrutiny of airport investments as well as their impact on the aviation industry as a whole.
“We have to be able to return our cost of capital as an airline. Or else we can't sustain the investment,” ANI quoted him as saying.
Walsh highlighted how every component of an airline's cost base contributes to the air fare customers end up paying, and said that airport charges should not be viewed as insignificant when compared with fuel expenses.
“Every aspect of your cost base contributes to the ticket prices that you'll be able to offer your customers,” he said.
Walsh also raised questions on airport investments which might not be required either by passengers or airlines, but boost the investment base on which the operator of the airport expects returns.
Walsh said that airlines are often criticised for generating profits while airports are accepted as profitable businesses. He voiced his support for an approach that would focus on returns across the aviation value chain.
Speaking on the broader cost outlook, Walsh said that airlines would continue to face pressure from high prices of jet fuel even if crude prices come down, since constraints in refining capacity have pushed up the prices of aviation fuel.
Walsh, speaking on the importance of the Navi Mumbai airport to IndiGo, said, “The move to Navi Mumbai, strategically, is important for us. We know that market is going to be a critical part of our expansion plans both domestically and internationally. Having a presence in Navi Mumbai as well as Mumbai is going to be important for IndiGo. How that comes about is the issue we have to discuss. We've got to a position where it makes sense for us and it makes sense for the airport," as per a report by Business Standard.
Speaking on the impact the redevelopment of Mumbai airport would have on airport charges, Walsh said, “If it means that there's greater capacity at the airport then the per passenger charge should be lower than it was today. And that's the challenge. In the same way as we focus on our cost, of course, I think airports need to have that.”
Walsh made his observations during a panel discussion at the Aviation India and South Asia Summit.
With agency inputs
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