Months before the Cheddi Jagan International Airport (CJIA) increased a number of fees, to cater for the US$150M renovations, airlines had complained to their association.
In late January, the International Air Transport Association (IATA) wrote management of the airport raising questions about the fees implementation and whether there were adequate consultations.
IATA is the trade association of the world’s biggest airlines, consisting ofa almost 300 members.
IATA’s Annaleen Lord, Area Manager of the Caribbean, on January 29, wrote senior officials of the airport, including Chief Executive Officer, Ramesh Ghir, questioning the process.
The airport, since 2011, has launched a major expansion costing US$150M. While the works has controversially been scaled down, the airport quietly told airlines earlier this year to start charging a higher security fee and a passenger service fee.
The accumulated charges- security and passenger fee- added up to over $4,000 on every passenger ticket.
IATA, in its letter to Ghir, disclosed that its members have asked for intervention regarding the planned increase to the security fee and the introduction of a passenger service charge effective April 1, 2019.
“They have requested that we contact CJIAC since no consultation with the airlines occurred in order to allow the airline users to accurately assess and agree to what could be considered fair and equitable charges at CJIA.”
IATA pointed out that according to international guidelines and principles on airport charges, there should have been consultations, cost-relatedness, non-discrimination, and transparency in the process.
IATA requested information on the consultations.
“As such, it would be appreciated if the presentation delivered to the CJIA Board or line Ministry in order to receive approval for the increases is shared with IATA and the airlines in order to better understand the cost-relatedness of these increases. This can be done via a webinar and IATA can assist with airline participation.”
The association stressed that while these are passenger fees that do not directly impact airline costs, it does have an impact.
“Please be mindful that proposed increases in fees in Guyana would increase the overall price of a ticket paid by passengers travelling to and from Guyana. As a result, passengers are likely to choose alternative destinations where no equivalent fee is applied or will just be dissuaded to fly altogether. This can ultimately have a negative overall impact on the Guyana economy,” IATA told the airport management in January.
IATA said that there is a procedure to be followed for the charges to take effect.
“Finally, once the airlines have been satisfactorily informed, in order for these charges to take effect on an airline’s ticket, an airline sponsor will need to file the request to IATA’s TTBS (ticket tax box service). However prior to doing so, several items need to be clarified and agreed to amongst the airlines and the airport authority.”
The association noted that it found a number of reasons why it cannot use a letter that it received to effect the changes to the charges that CJIA requires by April 1.
These include that there is no clear indications what is the new Guyana dollar equivalent for the Airport Security Fee.
“The present security fee, US$I1, was filed in local currency $2500 and not US dollars. As such in addition to the US $20, CJIA will need to specify the new GYD equivalent. This information is required so that there is no confusion when pricing systems are configured.”
IATA also wanted explanations on when exemptions would be granted and whether a number of other fees have been renamed.
“This information is required so that there is no confusion when pricing systems are configured.”
According to the airline body, when new or increased fees are proposed, the industry needs to consider two applicability dates- the selling date and the travel date.
This is important, the letter said, to establish since airlines sell their tickets in advance.
“We usually request that the selling date is a minimum of three months prior to the effective travel date when the fee will apply. This also ensures that the gap in the fee collection between tickets sold prior to the announcement is smaller. For example: CJIA is proposing that the fee is effective April 1. Based on this date, the effective date for both fees should be as follows: For tickets sold from January 1, 2019 for passengers traveling April 1, 2019. This scenario ensures a higher collection rate to CJIA.”
IATA, in its letter late January, noted however that the time is already outside the recommended 90 day minimum window which will significantly reduce the collection rate, a loss which CJIA will need to assume as airlines will not collect differences in fee at the check in counter as this can potentially delay flight operations and cause other service issues.
IATA recommended that there be a delay in the implementation.
“In light of the aforementioned, CJIA can potentially consider revising the effective date in order to avoid this situation. Please be assured that IATA is committed to continued collaboration with you and your team in order to achieve, safe, efficient and cost effective operations at the CJIA.”
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