Bangalore Airport Grants Indirect Sops to AirAsia India

June 19--NEW DELHI -- Bangalore airport has decided to offer sops to new airlines in a move being seen as a way of benefiting budget airline AirAsia India Pvt. Ltd, which launched operations this month with a flight to Goa from Bangalore.

Bangalore International Airport Ltd, which runs the airport, has crafted a new definition for what will be called a home carrier for the airport and got it cleared by the Airports Economic Regulatory Authority (Aera) on 10 June.

The airport has defined home carriers as those that declare Bangalore as their home base and station half their fleet in the city. The airlines will have to be headquartered in Bangalore, have the highest number of base aircraft (planes parked in the night) at the airport and have at least 1 million additional passengers annually.

Given that AirAsia has stationed its first aircraft, an Airbus A320, at Bangalore airport and may do so with the next aircraft too and possibly shift its operations to the city from Chennai, it may meet the requirements specified by the airport operator.

A home carrier will get a 50% discount on landing and housing charges and fees will be waived for night parking.

Bangalore airport declined to comment for this story.

The move may face resistance from the rivals of AirAsia, a joint venture between AirAsia Bhd, Tata Sons Ltd and Telestra Tradeplace Pvt. Ltd.

No other airline cleared by the aviation ministry fits the tag of home carrier.

"There will be opposition," said a senior private airline official. "Everyone will not keep quiet. They will talk of pulling out or neglecting Bangalore airport."

Major airlines including Air India, with a 120 aircraft fleet, Jet Airways with 112 aircraft, IndiGo with 78 and SpiceJet with 52 aircraft cannot station half their aircraft at Bangalore to qualify for the status.

Also, the airport wouldn't be able to handle such a large number of aircraft.

Air India, Jet Airways, IndiGo and SpiceJet declined to comment. Aera also didn't comment.

A government official, speaking on condition of anonymity, claimed Aera was justified in clearing the Bangalore airport operator's move.

The move had been approved because it was the first time any airport operator had come up with such a proposal anyway. Every sop given to any airline has to be cleared in the tariff card, which has to be Aera-approved. Secondly, it is not as if it's being done exclusively for AirAsia India; other airlines that meet the criteria can also take advantage of the incentives, this official said.

"If they don't like it they can go to airport tribunal or knock at the doors of the CCI," the government official said, referring to the Competition Commission of India.

This official said it was logical that airport operators will offer sops to new airlines and not to old ones if it wants to attract more passengers.

"Those Indian airlines which are themselves opposing new competition should be the last ones to complain about these sops," the government official said.

Aera has also added to the burden of passengers using Bangalore airport, which has been allowed to charge Rs.342, up from Rs.260, in user development fee from domestic travellers and Rs.1,368, up from Rs.1,070, from international travellers starting on 1 July, Mint reported on 14 June.

An analyst said providing incentives and rebates to attract airlines was a practice followed by all airports.

Bangalore airport's "offer to ensure AirAsia shifts base is cleverly done but on expected lines," said Kapil Kaul, South Asia CEO of the consulting firm Capa. "I expect other airlines to seek more rebates from Bangalore airport."

Copyright 2014 - Mint, New Delhi

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