A proposed rise of 9.65 percent in Airways Corporation prices for air navigation services is expected to be passed on to airline passengers.Airways published the proposal last month, and said a fall in movement volumes during the past two years combined w
A proposed rise of 9.65 percent in Airways Corporation prices for air navigation services is expected to be passed on to airline passengers.
Airways published the proposal last month, and said a fall in movement volumes during the past two years combined with low forecast growth in future years meant price rises were needed to bring it back to a break even position.
Board of Airline Representatives executive director John Beckett said airlines were not in a position to absorb the increase.
"Things aren't as bad this year as last year, but by and large airlines just don't have the sort of profitability to absorb cost increases so have to either pass them on or try to avoid them in some way," Mr Beckett said.
Air navigation fees made up roughly 4 to 5 percent on average of airfares.
In its pricing proposal, Airways said that between October 2000 and February, it increased its air navigation service charges by only 4.15 percent, excluding rebalancing or enhanced services requested by airlines. That equated to a real price decrease of 20 percent.
Over that period, Airways had rebated $26 million, or 2.3 percent of revenue, to its customers.
Airways' performance was mainly due to a 25 percent growth in revenues largely resulting from fleet and route mix changes, along with cost management, the proposal said.
Last April, Airways proposed lifting air navigation service prices by 8.3 percent, but some airlines sought to have half the rise deferred to help them through the challenging economic environment.
Airways agreed to defer 4.15 percent of the proposed rise last year, and largely as a result was forecasting an economic value added loss of $3.2m in 2009/10.
