KIA pushes hard for home carriers, 'hub' status

Kempegowda International Airport is pushing hard to secure a “home carrier” and emerge as a airlines hub with an offer of lower landing and parking tariffs.

AirAsia India and Air Costa have shown interest and KIA is even ready to relax its tough condition that the airline need to bring in one million additional passengers to the airport annually. KIA is willing to split that into quarterly targets and offer lower tariffs accordingly.

But airlines keen to grab the offer have a big grouse: The State government’s stiff 28 per cent sales tax on Aviation Turbine Fuel (ATF). KIA’s Airport Operations president, Hari K Marar on Tuesday said talks were on with the government to reduce the tax. “We are working very closely with the State on this.

A white paper has already been prepared. Reducing the tax to four per cent will guarantee an eight per cent growth in aviation,” he said at a media round table here.

Marar felt the State government has to see the reduction not as a subsidy but as investment to boost aviation. In 2012-13, tax on ATF had earned Rs. 308 crore for the State.

The Variable Tariff Plan (VTP) announced recently by airport operators is intended at attracting a home carrier. This tariff, explained Marar, allows an airline to benefit from a considerably lower tariff by operating flights during non-peak hours. “VTP’s objective is to incentivise airlines this way. By lowering costs, new airlines can reduce costs too.”

Bangalore, Marar said, is located at the geographic centre of South India and thus is suited to be a hub. KIA has insisted that a ‘home carrier’ will have to shift its headquarters to Bangalore.

The airline will then build its technical facilities and other infrastructure here, accelerating the creation of an aviation cluster with high growth potential around the airport. Tourism could also benefit from this by expanding the catchment area of KIA through services like the FlyBus, explained Marar.

KIA, he said, has recorded a turnaround after the Kingfisher fiasco. He informed, “In 2013-14, KIA recorded the highest passenger traffic of 12.86 million. This May, the 1.26 million traffic was the highest for a month. Cargo movement too recorded a 13 per cent growth in the first three months. Last two months, air traffic movements have crossed 10,000.”

The airport, according to senior director, Finance and Support Services, Bhaskar Bodapati, has already used 2,000 of the 4,000 acres allotted by the state government. “The second runway and terminal expansions will take this to 3,300 acres. Only about 400 acres will be available for commercial exploitation,” he said, stressing on the runway as a priority.