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AirAsia suspend operations from GMR Hyderabad International Airport Pvt. Ltd (Ghial)

Sunday , Posted by AME at 8:51 AM

AirAsia pulls out of Hyderabad airport over increased levies
Move comes after Ghial increased international passenger charges by almost 100% to turn profitable faster

Malaysian low-fare carrier AirAsia Berhad will from 11 January suspend operations from the Hyderabad airport because of increased levies on international passengers, setting a precedent that could hurt operators of swank, new airports built with billions of dollars in investment.

AirAsia’s move comes about two months after GMR Hyderabad International Airport Pvt. Ltd (Ghial) increased international passenger charges by almost 100% to turn profitable faster, after receiving approval from the airport regulator Airports Economic Regulatory Authority.

Hyderabad airport charges Rs1,875 per international traveller as a user development fee as it tries to recoup the cost of building the Rs2,920 crore airport. It was allowed to increase the fee in October from Rs1,000. Domestic passengers are paying Rs475, 26% up from Rs375 earlier.

“If we have to pay Rs1,875 plus Rs225 as passenger service fee, Rs515 as a service tax on a Rs4,000 average air fare, how do we operate?” said Suresh Nair, regional manager (India, Sri Lanka and Bangladesh) at AirAsia.

AirAsia expanded its Indian operations significantly in 2009 and 2010.

It now operates 68 weekly flights from India, up from four in 2008. AirAsia started direct services between Hyderabad and Kuala Lumpur in July 2010, with four weekly flights.

Nair said the airline had written to Ghial to offer relief from the increased charges, but there had been no reply from the airport operator, forcing AirAsia to pull out.

Ghial said it was “certainly disappointed with this move” but said the pullout by the airline didn’t have anything to do with higher charges.

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