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Airlines unite against airport peak hour charge

A month after he had taken over the top bureaucrat's job at the ministry of civil aviation, secretary Ashok Chawla agreed to meet a small group of journalists at his office.

Amidst the many questions he answered at the meeting on 5 March, Chawla floated what he called a ‘trial balloon': a proposal to hike airport charges during peak hours at three of India's busiest airports, in the hope that the country's rapidly expanding carriers would be tempted to move flights to less busy hours.

We haven't had any input from the airlines on this decision yet, he said. But I am sure when they read this in tomorrow's newspaper, I will hear from them.

That is exactly what happened. For all of last week, and into this week, the fiercely competitive airline industry rallied together in opposition to the proposal. Almost every airline chief executive officer (CEO) went on record, lamenting the proposal and chastising the government for trying to handle congestion at the airports by punishing the airline companies.

At the same time as the industry's criticism mounted, in the course of a public interest litigation, the Delhi High Court asked the ministry of civil aviation to prevent airlines from charging passengers an extra Rs150 on every ticket as a ‘congestion charge. The airlines showed no interest in complying, arguing that crowded airports and busy runways cost them lakhs of rupees as they wait for permission to land and take off.

But as the drama played out on the pages of the country's newspapers, it underlined the increasingly tight position the ministry of civil aviation finds itself in—while its primary responsibilities are to passengers and taxpayers, the vocal and powerful airline industry expects it to be an ally in difficult, unprofitable times.

It is a tightrope act, said Praful Patel, Union minister for civil aviation, at a press meet, flanked by CEOs of most of the big airlines. If there is any wrongdoing by the private sector airlines we at the public sector are here to balance it.

The public sector means Air India and Indian, the state-owned carriers which have had their near-monopoly on the Indian skies diminished to a 20% market share in the last 10 years. In deference to the ministry's wishes, they have never tacked on a congestion charge to their tickets.

The industry pushes hard for what it wants—lower sales taxes on aviation fuel, a tax exemption that would make leasing out aircraft cheaper, more runways and increased capacity at airports.

But, at least recently, it has declined to give the ministry what it has asked for—dropping the unpopular congestion tax and a rollback of a Rs750 fuel surcharge per ticket, now that the aviation fuel prices have shrunk by nearly a quarter in the last six months.

Patel didn't duck a question from a reporter when asked if he had told the airlines to reverse the congestion charge. "The government doesn't decide pricing; it is for the airlines to decide, he said. But, he personally would like to see the congestion charge withdrawn, he added.

The ministry's tightrope act came to a head on Tuesday evening, when The Federation of Indian Airlines (FIA), the industry's lobbying body, met the minister.

While the meeting was held behind closed doors, at least two airline heads said that much of the discussion revolved around airport congestion and the ministry's proposal to hike the airport charges. After the meeting, the ministry did a bit of an about-turn. For now, the proposal was not being adopted, but remember, said Patel, it was just a proposal, not a decision.

Airline representatives brushed off suggestions of FIA—a young body; its first official meeting was in November 2006—becoming a powerful voice in Indian aviation.

Bruce Ashby, CEO of IndiGo, a low-cost carrier that has made quick inroads into the market, said the lobbying group doesn't have enough clout to make the ministry change its mind. What it allows us to do is have a collective voice, and for the ministry to get input from the airlines without going to each one of us separately, said Ashby, who was in the hour-long meeting with Patel.

But every move the ministry makes is closely scrutinized for subtle shifts in policy by the hordes of journalists who cover the fledgling industry.

For instance, at a recent conference, Chawla's 200-ft walk from the dais to his car took about 20 minutes, as more than 30 journalists and cameramen threw questions at him, almost all related to the airport charges.

Listen, he assured the reporters, "these things are just proposals, and of course we are keeping the industry's concerns at heart." Tarun Shukla contributed to this story.