Dubai fee cancellation move to benefit foreign airlines, their GSAs

Dubai: Foreign airlines would be major beneficiaries from Dubai government’s decision to waive-off certain fees. On Monday, Dubai issued a resolution cancelling fees levied on airline agents and offices operating in Dubai.

Further details about the fees were not disclosed in the official announcement. A travel agent told Gulf News that the decision would likely apply to general sales agents (GSA) of foreign airlines based in Dubai. “These agents have to pay an annual fee of Dh25,000 for taking or renewing a license and if there’s a branch office, that’s another Dh10,000 on a yearly basis.”

Several airlines contacted by Gulf News said they are awaiting details from the government. “We don't know which fees they are going to waive,” said a spokesperson for GoFirst, an Indian low-cost carrier.

The move is being seen by some in the industry as a way to reduce airfares as travel from Dubai takes off in earnest. “We are not sure (at this moment) what saving it will bring to airlines,” said P.P. Singh, Regional Manager at Air India.

Air India operates 69 weekly flights to Dubai, while low-cost subsidiary Air India Express has 80 flights every week. British Airways and Cathay Pacific were not immediately available for a comment.

High fuel prices

Airlines’ margins are under increasing pressure due to a spike in fuel prices, which represent about 25-40 per cent of a carrier’s operational costs, depending on the fleet and market. Airline officials have flagged concerns about fuel prices possibly derailing the industry’s recovery from the pandemic. With airlines passing on the costs to the consumers in the form of higher airfares, they will be less inclined to travel in the months to come.

During an industry event last week, Qatar Airways CEO Akbar Al Baker said fuel represented about 40 per cent of the airline’s cost structure. “We were hedged the last financial year and hedged to a lesser extent in 2022,” said Al Baker. “At the end of the day, we have to raise prices to cover for the increasing cost of fuel.”

Nowhere is the pain being felt more than in the Indian aviation sector, where airlines have to pay taxes on top of the already high fuel prices. Earlier this month, Indian budget carrier SpiceJet said it would raise fares as much as 15 per cent to counter high fuel costs and a weak rupee.

“Aviation turbine fuel prices have increased by more than 120 per cent since June 2021 - this massive increase is not sustainable,” said Ajay Singh, the airline’s Managing Director. As of June 24, average jet fuel prices stood at $172.73 a barrel, up 117 per cent from a year ago.

Travel builds up nicely

Summer travel has been heating up with many UAE residents making plans for destinations such as Thailand and Bali. dnata Travel reported a 185 per cent rise in the total number of bookings made for summer breaks so far compared to the same period last year.

According to the travel booking website, these are some of the most in-demand destinations: Thailand, Maldives, Turkey, Mauritius, the UK, Indonesia, Italy, the US, Spain and France.

Dubai International (DXB) is also bracing for heavy traffic - DXB will see average daily passenger traffic hit 214,000 as summer travel soars between June 24 and July 4, its operator Dubai Airports said.