BENGALURU: A consortium of seven private airport operators has strongly opposed the Commerce and Industry Ministry’s proposed move to reduce the purchase of alcohol at duty-free shops at the arrival area in airports. The move is likely to be included in the union budget to be presented on February 1. If the move is implemented, purchases at duty-free shops will be limited to 1 litre of alcohol only. Currently, each passenger is permitted to buy a carton of 100 cigarettes and 2 litres of alcohol.
The move will increase airfare, encourage smuggling, cause job losses and hurt the airport industry, the Association of Private Airport Operators (APAO) said in a release. Bangalore International Airport Limited, Cochin International Airport Limited, Delhi International Airport Limited, Goa International Airport, Rajiv Gandhi International Airport, Hyderabad, Chhatrapati Shivaji Maharaj Internatonal Airport Mumbai and Navi Mumbai International Airport are members of APAO.
According to the APAO, duty-free revenues make up 15-20% of the total non-aero revenues and sales of liquor and cigarettes together account for over 75-80% of overall duty-free sales. To make up for the revenue loss, Aeronautical Charges would have to be increased which would have to be borne by airlines and passengers. The APAO estimated that these charges would go up by around Rs. 200 crores annually across India and have an impact on ticket prices. “It may even impact growth in passenger traffic which is already extremely subdued,” the release said.
It pegged annual revenue losses to all airports at Rs 650 crore and estimated the Airports Authority of India would lose Rs 330 crore every year. The proposal will lead to smuggling of imported liquor and encourage passengers to buy more at departure airports resulting in higher foreign exchange outflow, the release said, adding that revenue losses would affect the financial performance of airports and their ability to raise funding for future expansion.