Proposal to cut down duty-free liquor purchase draws flak from private airport operators

Hyderabad: The Ministry of Commerce and Industry, on January 21, had proposed to cap the number of liquor bottles and cigarette packets that a passenger returning from an overseas trip may buy.

However, according to Association of Private Airport Operators (APAO), this may lead to a loss of almost Rs 650 crore per annum for the airport authorities. Furthermore, the private organization alleges that this move may lead to loss of jobs of around 8,000 - 10,000 staff directly and indirectly “as there will be layoffs in sales force, logistics, warehousing, transportation, shipping and finance.”

The proposal plans to reduce the liquor allowance from two liters to one litre, while introducing a complete ban on sale of cigarettes from duty-free shops. Questioning this proposal by the Ministry of Commerce and Industry, the private body of airport operators said that duty-free revenues make up for 15-20% of the total non-aero revenues. They also added that the sales of liquor and cigarettes together account for over 75-80% of overall duty- free sales. “To make up the revenue loss on account of these new restrictions, the Aeronautical Charges will have to increase which will have to be borne by airlines and passengers,” alleged the private body.

Reducing the duty-free allowance will have an adverse impact on the Airports Authority of India (AAI), with an estimated loss of over Rs 330 crores, as reported by the airport operators. “This will reduce AAI’s ability to develop airports in remote and rural areas, upgrade airport infrastructure and regional connectivity,” said the organization.

The airport operators further alleged that the government is not in a position to slash non-aero revenues, because revenue from the airline passengers alone is not enough to sustain an airport. “If Non-Aero revenues are restricted by an act of government, the new operators will find the airports unviable and may even renege on their contracts. Any future privatization planned by the government will not succeed,” they said.

Earlier, private airport operators in India had asked for a doubling of duty-free liquor allowance from two to four litres so as to bring it in par with the liquor allowance with the neighboring/Asia Pacific countries. If the proposal to slash duty-free liquor allowance in India bears fruit, it is the private airports’ revenue that stands at a loss.