DIAL wants low-cost carriers to shift ops
Delhi Airport, India’s largest, is advocating for low-cost carriers to relocate their flights to the upcoming Noida International Airport in Jewar and the smaller Hindon Airport in Ghaziabad. This move aims to allow Delhi Airport to concentrate on the high-margin business associated with handling flights from fullservice airlines.
At present, Delhi Airport manages 8,554 scheduled flights per week, with Indigo, a low-cost carrier, representing approximately 38.5 per cent of these flights, according to aviation analytics firm Cirium.
Noida Airport, situated about 70 kilometres away from Delhi Airport, is scheduled to commence operations by year-end.
During a conference call with investors on February 1, Saurabh Chawla, executive director of finance and strategy at GMR Airports Infrastructure, said, “Jewar, whenever it opens up,
The proposed move would allow Delhi Airport to concentrate on high-margin business associated with handling flights from full-service airlines that generate more revenue for airports
will primarily be freight-oriented and cater to low-cost airline traffic. We encourage this traffic to flow from Delhi Airport to Jewar or to Hindon or to other regional airports, considering the margins we earn from each passenger.”
Chawla further added, “Our strategy focuses on capturing a higher share of the high-margin business associated with full-service airlines, both domestic and international.”
Delhi Airport is operated by Delhi International Airport (DIAL), a GMR Group-led entity. Noida Airport is under construction by Yamuna International Airport Private (YIAPL), a Zurich airport subsidiary. Hindon Airport, managed by the government-run Airports Authority of India, currently handles a few flights from regional carriers like Star Air.
DIAL, YIAPL, Indigo, Air India, AIX Connect, Spicejet, Vistara, and Akasa Air did not respond to queries from Business Standard on this matter.
Full-service carriers typically operate larger aircraft such as the B777 and A350, generating more revenue for airports through higher landing fees and other charges. Additionally, airports earn a higher margin per full-service passenger due to premium services like high-end retail, lounges, and amenities.
Last month, aviation consultancy firm CAPA India noted that the competition between Delhi and Noida airports is expected to be intense, driven in part by the difference in valueadded tax (VAT) on aviation turbine fuel (ATF).
Delhi Airport’s VAT is 25 per cent for domestic flights, while it will be only 4 per cent at Noida Airport. ATF constitutes about 40 per cent of the total cost for an airline in India.
However, Chawla emphasised that airport success is not solely dependent on varying VAT rates on ATF. He highlighted the importance of the underlying community that the airport serves, saying, “The mere fact that there’s an ATF difference really doesn’t matter much. It is the underlying passenger, the quality of passenger, the income strata of the passenger, and the growth potential that this particular airport will provide in the near term that is far more important.”