Commerce Ministry’s proposal to cut the quota for purchasing liquor at duty-free shops to one bottle has left private airport operators in a tizzy.
A senior official of a private airport said that the proposal, if accepted by the Finance Ministry, would also hit newcomers such as Zurich Airport International and Adani Enterprises.
While Zurich has bagged the contract to build the Greater Noida airport, Adani has successfully won the right to upgrade and manage six international airports, including Ahmedabad, Lucknow and Jaipur.
“Both Adani and Zurich have won the bids promising to share highest revenue share per passenger. If the quota for purchasing liquor is halved, then their maths will go wrong,” the executive said.
He added that the proposal would also affect investor sentiment at a time when the Airports Authority of India (AAI) is planning to bid out six more airports on public private partnership (PPP).
Satyan Nayar, Secretary General at Association of Private Airport Operators (APAO) said that the proposed move to slash liquor purchase quota would result in substantially affecting the non-aeronautical revenue of airport firms.
“This will necessitate increase in landing and parking charges by the airport regulator. As a result, the cost of operations for airlines will go up. The airlines would pass on this cost to passengers. So, airport operators, airlines and passengers will be affected,” Nayar said.
As per an estimate, liquor accounts for 60-65 per cent of total sales at duty-free shops at international airports. Mumbai and Delhi airports would see the maximum impact of this as earnings from duty-free shops contribute significantly to their total non-aeronautical revenues.
“Decision to reduce entitlement to one liquor bottle will impact duty-free sales significantly without any major forex saving,a said Kapil Kaul, CEO (South Asia) of Sydney-based Centre for Asia Pacific Aviation (CAPA).
Kaul further said that this will impact airport bids – recently awarded six airports and the proposed six airports.
Seeking to bring liquor allowance at par with countries like Thailand, Singapore and Dubai, APAO had earlier proposed to double its limit to four litres per person for purchase from a duty free shop at Indian airports.
In its proposal for Budget 2020-21, Association of Private Airport Operators (APAO) had said that sizable business at duty free operations in South East Asia/Middle East region is through tourists that originate in India.
“Liquor allowance given in India is not at a par with liquor allowance in neighbouring countries/Asia Pacific countries,” airports body APAO wrote to the government.