The cost of flying: Pakistani airports among the most expensive in region

Despite fierce opposition, new taxes come into effect from January 17.

In a letter to the airline operators committee a few weeks ago, CAA’s Air Transport and Economic Regulation Director Fauzia Saleem Khan said, “Even after the increase in taxes, we are still three to four times cheaper than many airports in the world as well as in the region.”

Earlier, national and international airlines, during month-long deliberations in December, fiercely opposed the imposition of new taxes from January 1, which forced CAA to defer them until January 16.

The International Air Transport Association (IATA), a grouping of 230 airlines, also wrote a letter to the CAA director-general, asking him not to impose new taxes as it would drastically increase cost of operations of national and international air carriers operating in Pakistan.

IATA said new taxes like infrastructure development charge, security charge, cargo handling facility charge and fire and rescue facility charge would definitely damage profits of airlines. It also quoted an industry forecast that profit margin would only be 0.8 per cent in 2012, which would have repercussions for Pakistan’s aviation industry as well under such circumstances.

Pakistan International Airlines (PIA) spokesperson Sultan Hasan said initially all airlines opposed the new taxes, but “now after extensive talks all have started collecting taxes from Friday last week on tickets being booked after January 16.”

Some airlines were collecting the new taxes from passengers in cash but later all would update their systems, he said, adding PIA would pay all the taxes like other national and foreign airlines.

Travel agents say CAA’s claim is true in the case of European airports which are three to four times expensive than Pakistan, but when compared with regional peers like Dubai and Sri Lanka, CAA is not right in its assertion that domestic airports are the cheapest in the region.

“After adding all airport charges, Pakistan is somewhere near India but it is much expensive than Dubai and Sri Lanka,” a travel agent told The Express Tribune.

On every return ticket for a Karachi-Dubai flight, a passenger has to pay $57.72 in airport taxes, including fuel surcharge, while Mumbai-Karachi flight will cost around $97 in taxes. In comparison, average airport charges in Dubai are around $21.92 per ticket, which are much lower than both India and Pakistan.

“Airport taxes vary because of various reasons. It also depends where you get the ticket because airport authorities charge more taxes from where the passenger departs than the airport where the passenger lands,” he added.

Aviation industry officials say Sri Lanka has kept its taxes low because it wants to give a boost to the tourism industry following the end of a 30-year insurgency. Dubai airport is generally cheaper because of the heavy traffic it receives.

European airports are naturally expensive because almost all the world airlines want to get best time slots at these airports, prompting the authorities there to charge more taxes.

Defending the imposition of new taxes, a CAA spokesperson said unlike civil aviation authorities of other countries, Pakistan’s aviation authority increased taxes after a long gap of more than 10 years, which had become necessary considering the high inflation in the country.

According to CAA officials, it does not take any money from the government and needs additional funds to construct new airports and expand existing ones. CAA is constructing a new airport in Islamabad, which is expected to be completed by 2014. “Other airports are in an expansion phase which need funds and that is why CAA is increasing airport taxes,” a CAA official said.

Airport charges 

Country                         Economy class     Business/First class

Pakistan                          Rs4,960                  Rs8,460

UAE                                Rs1,960                   Rs1,960

India (Mumbai)             Rs2,340                  Rs7,720

Bangladesh (Dhaka)      Rs3,083                  Rs3,083

Thailand (Bangkok)       Rs2,010                  Rs2,010

Note: All prices exclude fuel surcharge because of variation in travel distance. Figures have been converted into Pakistani rupee

Published in The Express Tribune, January 10^th, 2012.