The discontinuation of FTC allowed airlines to take benefit of input tax credit. Airports levy charges, such as FTC, infrastructure charges, and into-plane charges on sale of jet fuel.
The levy used to be passed onto airlines, pushing up the operating cost. The move to discontinue FTC had led to revenue losses for airports. According to the AERA's calculation, Mumbai, Bengaluru, and Kochi airports were to lose Rs 106 crore, Rs 140 crore and Rs 46 crore, respectively, in a year.
has stated that the government was supposed to compensate operators for the loss of revenue because of the withdrawal of FTC. Accordingly, the authorities have decided to increase the landing charges by 27.88 per cent to compensate the airport operator,” an order from AERA, reviewed by Business Standard, stated. On similar grounds, Bengaluru airport
and Kochi airport demanded an increase.
Airlines had demanded that any increase in charges be deferred as they have been hit hard by Covid-19. “Any increase in airport charges for the remaining period will worsen the crisis for airlines. Airport operators should equally play a role in this situation by lowering their profit expectations and help provide the much-needed financial help to airlines,” said Federation of Indian Airlines, which represents IndiGo, SpiceJet, and GoAir.
However, the airports stated that the demand of airlines to defer charges citing the Covid-19 crisis was not feasible because the increase is just a compensation for the lost revenue and not a further addition. “The AERA
has only ensured revenue neutrality by compensating for the loss of revenue which was demanded by airlines to avoid double taxation of GST. It doesn’t put any additional burden on airlines,” said Association of Private Airport Operators, which represents PPP airports like Delhi, Mumbai, Bengaluru, Kochi, and Hyderabad.