Aviation

The civil aviation industry in India has emerged as one of the fastest growing industries in the country during the last three years. India is currently considered the third largest domestic civil aviation market in the world.

India’s aviation industry is largely untapped with huge growth opportunities, considering that air transport is still expensive for the majority of the country’s population, of which nearly 40 percent is the upwardly mobile middle class.

The industry stakeholders should engage and collaborate with policy makers to implement efficient and rational decisions that would boost India’s civil aviation industry. With the right policies and relentless focus on quality, cost, and passenger interest, India would be well placed to achieve its vision of becoming the third-largest aviation market by 2024.

An airport generally allocates 70 percent of total operating expenses to airline cost centres; obviously, this ratio can vary significantly across airports. The airport then calculates rates and charges to recover a portion of allocable costs from the airlines, including operating expenses, debt service, and other fund requirements.

Therefore, the financial success of a compensatory airport depends on whether the airport can generate enough landside profit and terminal concession revenues to cover the deficit in the terminal cost centre. If the airport can reasonably allocate more operating expenses to the airline cost centres, it will be in a better financial position, relying less on non-airline revenues that are mostly traffic-driven.

Audit of airports, mainly take care of the capacity utilization, revenue, and margin pattern of partner airlines and also the revenue out of allied services like duty free shops, and other lease rentals from the commercial set ups at the terminals.

Terminal wise margins, Route / Airlines wise margins, Margins out of Cargo services, and Cost per Passenger Vs Revenue per passenger will help the management to make informed decisions.