Local November 27, 2023 - 12:27 pm

Rate adjustment is less than 1% of the cost of the tickets, says Aerodom

Santo Domingo.- Aeropuertos Dominicanos Siglo XXI (Aerodom) has recently provided an explanation regarding the adjustments to airport rates, which are set to commence on December 1. These adjustments are a response to the inflationary trends over the past few years and are aligned with the contractual agreements in place.

• Details of Rate Adjustment: The increase in rates is a partial implementation of the indexation that was due five years ago, amounting to only 13% of the required adjustment. The total adjustment approved by the Dominican State is 18.4%, to be implemented over three years – 13% in 2023, and 2.7% each in 2024 and 2025. This decision was made considering the U.S. Consumer Price Index (CPI) inflation of about 26% from 2017 to 2023.
• Impact on Air Ticket Prices: For 2023, the rate increase translates to RD$147.43 Dominican pesos (approximately US$2.48). Further adjustments in 2024 and 2025 will be RD$32.53 and RD$33.65 Dominican pesos respectively. These increments represent a fraction of the total airfare cost, each being less than 1%.
• Basis for the Adjustment: The tariff increase is based on the 1999 concession contract between Aerodom and the Dominican State, specifically Article 5.4.4. It applies to regulated airport tariffs and is designed to have minimal impact on overall airfare costs. The adjustment is intended to recover the real value of airport rates that have been frozen for over five years.
• Relation to Airfare Increases: Studies by Flare Aviation Consulting and ICF for ACI-LAC indicate that airport fee adjustments do not directly affect airfare prices. Airport charges constitute a minor portion of airline operating costs in the Latin American and Caribbean regions, typically less than 7%.
• Ongoing Investments and Growth: Despite inflation-related income reductions, Aerodom has continued to invest heavily in airport infrastructure. With over US$60 million planned for the next two years, the company aims to enhance airport facilities significantly. Since VINCI Airports took over Aerodom, there has been a notable increase in air transport growth, with traffic rising by 6% annually since 2015 and a 20% increase over 2019 figures in 2023.
• Concession Contract Details: The concession contract, extended until 2060, includes a substantial initial payment to the Dominican State and a commitment to a significant investment program. This program involves constructing a new terminal at AILA and other critical infrastructure upgrades.

Aerodom’s explanation serves to clarify the rationale behind the rate adjustments and their minimal impact on airfares. It also highlights the company’s commitment to ongoing investment in the Dominican Republic’s airport infrastructure.