Interest fee

Indian airports leave international airline fee collection system

Indian airports, which relied on the International Air Transport Association (IATA) to collect fees for various charges from foreign carriers, will now handle the task locally. The procedural change comes after the Airports Authority of India (AAI) recently withdrew from IATA’s assistance in collecting payments to protect itself from any loss of revenue related to the case. Devas.

AAI begins collecting dues directly

A new element has been added to the Devas arbitration case (more on that later), with AAI no longer taking the services of IATA to collect dues from foreign airlines. It is the latest in a series of earlier court orders, asset seizures and Air India reactions, all of which have been unfolding for months now.

A little over a month ago, the AAI resumed billing and collecting navigation fees directly from foreign airlines serving India or using its airspace. The Business Standard quotes a spokesperson for the authority saying,

“AAI began billing and collection from April 1st with foreign operators. Collection would be through AAI’s bank account and is done to protect AAI’s interests.

This ends a decade and a half of practice in which IATA collected overflight fees from international carriers on behalf of the IAA. In an email viewed by Business Standard, IATA replied,

“While we are disappointed with AAI’s decision, we understand and respect it. We will continue to engage with AAI and collaborate in other areas of mutual interest.

Indian airports will charge foreign carriers directly for their services. Photo: Getty Images

What role did IATA play?

The AAI collects fees from national and international airlines in exchange for its navigation services. While it has always collected contributions directly from national carriers, it transferred responsibility for foreign airlines to IATA in 2007.

The authority has shared its air traffic data with IATA, which has been used to determine charges owed by various international airlines using Indian airspace and airport services. This was done to make the process easier and error free.

IATA’s association with the IAA in this regard is not unique as it acts as a service provider for many airlines and airports through its billing and settlement plans, which gives them makes life easier.

The fuss over navigation fees is understandable as it accounts for a considerable portion of AAI’s revenue. For example, in the financial year 2019-2020, the AAI collected over Rs 3,592 crore (approximately $483 million) for road navigation and terminal navigation and landing fees.

In January, a Canadian court ordered the seizure of money collected by IATA on behalf of AAI and Air India, the two entities being considered the “alter ego” of the Indian government. Photo: Getty Images

The Devas Arbitration Case

Finding a thread that connects Devas Multimedia, AAI, Air India (when it was still state owned) and somehow IATA can be a little tricky to figure out. While the case deserves a separate article, it is essentially about a 2005 deal gone wrong between Devas and the Indian government where he planned to lease satellite space to the company for broadband and other data services.

The $220 million deal, granted by the Indian Space Research Organization, eventually became a point of contention. The government claimed it potentially lost billions of dollars in irregularities in the deal, and Devas claimed more than $1.5 billion in damages from the revocation of the contract.

In January, a Canadian court ordered the seizure of money collected by IATA on behalf of AAI and Air India, the two entities being considered the “alter ego” of the Indian government. A few days later, the court limited the attachment of Air India’s dues to 50% and ordered that none of the sums held in the name of the IAA be touched.

However, before the funds could be disbursed to AAI, a Swiss court issued an order to seize the contributions. AAI says the case is pending in Canada and Switzerland.

What do you think of this case? Please share your opinions below.

Source: Trade Standard


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