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Provide relief to alleviate financial burden on airports: Operators urge government

The Association of Private Airport Operators (APAO) on Wednesday said that airport operators are unable to generate sufficient cash flow to sustain operations
By Neha LM Tripathi, Mumbai
PUBLISHED ON JUN 10, 2021 06:20 PM IST

The Association of Private Airport Operators (APAO) on Wednesday said that airport operators are unable to generate sufficient cash flow to sustain operations. APAO specified that airports require relief measures not only to ensure sustaining operations but also to save jobs and allow economic recovery of the airport. It also stated that the first two waves have made it difficult for the operators to survive and the third wave will allow continued muted traffic in FY 2022 as well.

APAO, which represents airports at Mumbai, upcoming Navi Mumbai, Delhi, Hyderabad, Bangalore, Lucknow, Mangaluru, Ahmedabad and Kochi, stated that due to the pandemic, the cash flow situation is ‘precarious’ and that the government needs to provide some relief measures to the airport operators. The onset of the second wave of Covid-19 has further compounded the crisis and according to APAO, domestic passenger traffic has dropped to less than 18-25% of pre-Covid levels.

According to APAO, air traffic is barely expected to reach the FY 2021 level in the much predicted third wave, which itself was not adequate for the financial survival of airports.

“Airports have to incur fixed costs for maintaining and operating its infrastructure such as runways, taxiways, apron, parking bays, and terminal buildings etc. In airports, of total costs incurred, 80-85% of it is fixed costs. 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,” a statement from APAO read.

It also said airports are not generating sufficient cash flow to sustain operations and meet debt obligations.

The organisation stated that poor cash flows and consequently downgraded credit ratings have made it impossible for airports to take further financing support from financial institutions. It also stated that airports generate jobs for skilled and unskilled categories in big numbers and help the economy.

“With stress on the finances, there is a worry that many of these jobs will be lost. This is the reason, many countries are supporting by giving part wages to these workers, like Germany and France,” APAO said.

“Airport revenue generation is directly linked to traffic levels. It is important for the government to understand that along with airlines, airports are also in dire straits. If the situation continues airports will find it difficult to sustain even day to day operations. Job losses would be across all departments of airports. Every lost passenger is a loss not just to airports but to the retailers in airport terminals, the taxis and rideshare drivers etc. and any other airport business that relies on airports and the passengers they serve,” said Satyan Nayar, secretary-general of APAO.

As per forecasts by international agencies, the global passenger traffic will not return to pre-Covid-19 levels until 2023-24.

“As the cash flow situation is precarious, airports have been requesting the government amidst an extremely challenging environment to provide some relief measures to the airport operators which will directly alleviate the financial burden for airports. 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,” APAO concluded.

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