A move by the US administration to reduce congestion at New York's John F Kennedy airport -- the busiest in the world -- by auctioning parking slots, might spoil the party for private carriers in India such as Kingfisher and Jet Airways, which are planning their operations there.
It could also mean passengers, especially a business traveler, will have to shell out more from March this year.
The Federal Aviation Administration is planning to auction slots, instead of a fixed price with carriers.
According to Kapil Kaul, CEO (Indian subcontinent and West Asia), CAPA, the exact details of the base price that the FAA decides for the slots should be known to the airlines in two months.
Eventually, if the costs of the operations go up, then it has to be absorbed and this means paying more for a premium airport such as JFK, he added.
The aircraft can land in Newark, 42 kms away from New York, which takes an hour and a half extra to commute. But experts say that business travelers prefer JFK because of short-distance and also better connectivity. The government is also planning to cap the number of flights in Newark.
Currently, there are no slots available at the JFK airport.
Congestion at the New York airport has been costing the airlines a lot because of the additional costs of the jet fuel burn due to holding time and also waiting at the tarmacs, sometimes up to three hours.
Vijaya Mallya-promoted Kingfisher Airlines, which is planning its US operations in April this year, will get affected by the new rules. The airline was reportedly informed about the JFK plan to auction the slots.
The airline says that if the slots auctioned at the JFK are too exorbitant, it might change its plan to fly to JFK and instead fly to Newark airport.
"We are considering both the airports for our operations and if costs are too high at the JFK, we will fly to Newark. It is well connected and also less congested," said Hitesh Patel, executive vice-president with the airline.
The next step for the US Department of Transportation is to cap the number of flights at Newark airport.
Patel sidestepped a question about whether the additional costs incurred due to the auction will be passed off to the passengers or it will be absorbed by the airline.
"We would not like to comment on it right now. If the plan to decongest the JFK airport cuts down the delays and results in saving jet fuel burn, then we would think of buying slots as one time investment," said Patel.
But, he said, flights to JFK may be priced a little more than the flights to Newark. The airlines in India are already reeling under the heavy costs that they have to shell out at Heathrow Airport in London for getting slots.
"Already, the cost of getting slots at the Heathrow is exorbitantly high (currently 98.5 per cent slots had been sold out). An airline in India has shelled out as much as Rs 50 crore to get a slot at Heathrow, now JFK would add another millions of dollars, obviously subject to availability," said an airline executive.
Jet Airways, which launched its US operations in August last year and has a daily flight from Delhi to JFK airport, didn't comment on the issue.
But Air-India, which launched its direct flight to the US during the same month, says it has its slots in place and would not be impacted.
But the airlines in India will have competition from American carriers that have slots in the JFK such as the Continental, which also operates direct flights from India, and Delta Air Line that flies into JFK airport.
Aviation experts feel that it is time for airline operators to pay for premium slots at the busy airports and the move is essentially a market-based approach.
Recently, Alitalia (now no longer in operation) auctioned its slots at the Heathrow and reportedly made a huge amount from that auction.
This might also happen at New York where airlines such as Continental would lease their existing slots to other airlines.
