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Airports to rework plans as carriers cut costs

Airport developers who were planning exclusive terminals for low-cost carriers have begun re-drawing plans as almost all domestic carriers are now switching to low-cost operations.

india Updated: Aug 23, 2009 16:35 IST

Airport developers who were planning exclusive terminals for low-cost carriers have begun re-drawing plans as almost all domestic carriers are now switching to low-cost operations.

"We have to rework and redraw plans as most scheduled domestic carriers will now largely operate as low-cost carriers," said an official of the Airports Authority of India (AAI).

All major airports, including international airports, had earlier planned to have separate no-frill terminals for low-cost carriers. "This has to be reworked," the official told IANS requesting anonymity.

While national carrier Air India is set to launch its low cost operations next month, other full service carriers like Jet Airways and Kingfisher Airlines have already launched such operations on several domestic routes.

Air India has planned to gradually shift to the low-cost model on 70-75 per cent of its domestic routes.

As a result, the AAI official said, the focus now would be on subsidising an airport's operational costs to meet the demand of low-cost operations. "The investment plan has to be worked out accordingly," he said.

This would be in the case of international and bigger airports where traffic movement was higher.

Currently, charges for airport usage, navigation and other operational costs are the same for low-cost and other carriers.

Delhi International Airport Ltd (DIAL), which operates the Indira Gandhi International Airport at the national capital, has already planned to use an existing terminal, 1D, as low-cost terminal once the upcoming terminal 3 begins operations next March.

A DIAL official said it was still too early to work out a new plan. "Airlines will have to take a call. As of now, we will stick to our original plan."

According to him, full fare airlines would start operating from terminal 3 after it's commissioned.

Airport developers at greenfield airports at Bangalore and Hyderabad too are unlikely to go ahead with separate terminals for low-cost carriers as had been planned earlier.

With the low-cost carriers paying the same charges, other, no-frill airport terminals were seen as a possible answer to help them cope with losses on account of soaring aviation fuel prices and operational costs.

According to the AAI official, low-cost terminals will not have aerobridges, baggage conveyor belts or even buses to carry passengers. Moreover, some airports may not be air-conditioned.

"But these terminals will provide connectivity across India by offering low operational charges to airlines, thus helping to keep tickets affordable," he added.

Currently, IndiGo Airlines, SpiceJet, GoAir as well as JetLite and Kingfisher Red, the low cost arms of Jet Airways and Kingfisher Airlines, besides a few more airlines, operate as low-cost carriers.

These carriers, which charge lower fares, have improved their market shares and load factor. A few even reported profits in the last quarter.

However, bigger carriers in India have reported losses, and are mulling steps to bring down overheads. Air India, for instance, which reportedly incurred losses of over Rs 5,000 crore ($1 billion) last fiscal, is now thinking of moving out of its headquarters at Nariman Point in Mumbai and its regional office in Delhi.