Concerned over an expected cost escalation due to the Government decision to privatise six more AAI-run airports, AirAsia India has sought the Aviation Ministry’s permission to run its proposed operations from the old terminal of the Chennai airport.
“AirAsia India has written to the Aviation Ministry seeking its permission to use the old Chennai terminal for its proposed operations. The move comes after the Government decided to privatise six airports, including Chennai,” a source close to the development told PTI.
The Aviation Ministry had recently decided to hand over six Airports Authority of India (AAI) run airports in Kolkata, Chennai, Ahmedabad, Lucknow, Jaipur and Guwahati to private companies despite vehement opposition from AAI unions, after investing over Rs 5,000 crore of public funds for their modernisation.
The Malaysia-based AirAsia, whose USP is low-fare, mostly flies from low-cost airports instead of main airports to save costs, a concept which is yet to take off in the country.
AirAsia chief Tony Fernandes had yesterday tweeted that he was looking to make profit in the first year of operations in India.
Even in Malaysia, AirAsia operates from the low-cost terminal of the main Kuala Lumpur international airport.
“Once these six airports go into the private hands, the cost of operations will easily go up by 50 per cent as we have seen in the case of Delhi and Mumbai airports where the costs have gone up almost six times after privatisation. And this increased cost will have to be eventually passed on to passengers. AirAsia will find it economically unviable with such high costs,” the source said.
AirAsia India, a joint venture between, AirAsia, Tata Group and Telestra TradePlace, had late last week received the no-objection certificate from the Ministry and is likely to launch its domestic operations soon.
Stating that it is “feasible” for AirAsia India to operate from the old Chennai terminal as the cable work has still not been removed, the source said: “The terminal can be usable after minor repairs.”
However, the Airports Economic Regulatory Authority may become a stumbling block in the Malaysian carrier’s proposal as, “it will be up to the regulator to allow or not a double tariff structure at one airport,” a source said.
AERA officials were not available for comments.
Global airlines body International Air Transport Association has also warned the Government over its privatisation move, saying, “any unnecessary private shareholding may increase the focus on profit=maximisation and lead to higher user costs.”