Financial health of J&K’s twin airports not good, losses touch Rs. 18 crore

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Syed Junaid Hashmi

JAMMU, Jul 20: Low air traffic has taken its toll on the financial health of the two airports in the twin capital cities of Jammu and Srinagar.

Out of total 93 loss-making airports, Jammu and Kashmir is among the states where the losses are on the higher side. Their annual losses range from Rs 4 crore to Rs 13 crore. The data available with the Union ministry of civil aviation, a copy of which is with Newspoint Bureau shows that both the airports in Srinagar and Jammu are loss making airports.

According to the data, Srinagar airport’s annual loses for the year 2014-15 were around Rs. 13.35 crore and that of Jammu airport were Rs. 4.63 crore. Low air traffic movements resulting in lesser revenues coupled with lower non-aeronautical income from parking and shops at the airports has hurt the financials of these airport, said senior officials of Airports Authority of India (AAI), which handles these nine airports.

He added that losses to AAI-operated airports are primarily because of low air traffic movements, resulting in lesser aeronautical revenue, low non-aeronautical revenue potential and basic operating expenditure on account of regulatory/IATA and security requirements. He further said that Airport Authority of India (AAI) has initiated several steps to make loss-making airports viable and profitable by development of cargo activities, enhancement of non-aeronautical revenue through revision of rates and awarding of contracts through master concessions, allowing flying schools at non-operational airports, encouraging maintenance, repair and operations (MRO) activities and revision of base rates.

Interestingly, the new government’s plans to build 50 low-cost airports involve developing infrastructure for air connectivity in remote areas. Although, the ministry of civil aviation has written to the finance ministry to allow the AAI to raise funds by issuing tax-free bonds for developing budget airports, there is no clarity yet on how these airports, once developed, are going to earn revenues, considering that AAI-operated airports at remote areas are already posting huge losses.

An analyst tracking the aviation sector, who didn’t want to be identified, said that though the government’s plan to develop low cost airports sounded ambitious, its success would largely depend on the financial condition of carriers. “Huge losses have forced airlines to trim down operations and fly to fewer airports. Not many airlines want to experiment with new routes, especially to Kashmir and Jammu”, the analyst said.

Today, most commercial airlines, except for the national carrier Air India, operate in sectors that register a high load factor. In the past, several airlines have stopped flying to routes which didn’t generate enough load and yield. Recently, SpiceJet has also cut several routes as it looks to turn around its operations. According to AAI officials, commercial airlines in India currently fly to about 70 airports in the country, down from about 95-100 a few years ago.

“It’s not in the airlines best interest to fly on routes that yield low load factor and are loss making,” said an airline official who declined to be named. ”The new government’s initiative of developing Jammu and Srinagar airports is ambitious. But, will it help increase the profits of the AAI? I don’t think so,” the official added. He stressed that government should find some other way out of turning these loss making airports into profitable ones.

 

 

 

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