Date:10/05/2006 URL: http://www.thehindubusinessline.com/2006/05/10/stories/2006051001840700.htm

Back IATA unhappy over route navigation charge hike

Ashwini Phadnis

New Delhi , May 9

THE International Air Transport Association (IATA) has expressed disappointment at the latest move of the Government to increase Route Navigation Facility Charges (RNFC) by 4.5 per cent even as the domestic airline industry is not unduly perturbed by it.

Sources indicated to Business Line that the increase goes against the international conventions and guidelines to which India is a party.

"Every increase adds to the cost of operations. Besides, there should have been discussions between the various stakeholders before implementing the decision," they said.

IATA members comprise 265 airlines — the world's leading passenger and cargo airlines among them — representing 94 per cent of international scheduled air traffic.

The RNFC increased from Rs 4,020 to Rs 4,200 per unit and became effective from midnight of April 2.

From now an airline flying between Delhi and Mumbai would have to pay Rs 11,700 up from Rs 11,000 as RNFC.

Domestic industry `cool'

When contacted a spokesperson for the low-cost airline Spice Jet pointed out that with RNF charges accounting for about 6-7 per cent of the cost of operations, the latest increase puts an additional financial burden of less than 1 per cent on total costs.

"If a similar increase had been announced in global oil prices, it would have been a body blow for the industry," said a senior official of Spice Jet.

The Managing Director of Air Deccan, Captain G.R. Gopinath, also felt that the move would not have much of an impact on the airlines' financials.

During the recent past the domestic airline industry has seen input costs heading northwards. The price of aviation turbine fuel that constitutes 30-35 per cent of operating costs peaked at about Rs 35,000 per kilolitre during financial year 2005-06 from a level of Rs 27,000 during the previous year.